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CHAPTER 15

Building Diverse Partnerships in Health Care and Industry: How Organizations Must Partner to Build Disruptive Futures

Denise Duncan, Joshua Rutkoff, and Jerry E. Spicer

CHAPTER OBJECTIVES

Upon completion of this chapter, the reader will be able to:

Describe the nature of successful labor and management partnership behaviors in healthcare organizations.

Define the three paradoxes of labor–management innovation.

Discuss examples of innovative partnerships and how they inform healthcare change.

Health care in the United States is going through a period of great change, much of it driven by the multiyear rollout of the Patient Protection and Affordable Care Act (PPACA) and its mandates for who and under what structure individuals will be covered by health insurance. The authors of this chapter are perhaps uniquely situated to forecast the challenges this period of change will present to the U.S. healthcare industry and to recommend strategies for meeting those challenges; they are veterans of the trailblazing labor–management partnership between Kaiser Permanente and the Coalition of Kaiser Permanente Unions, itself a partnership composed of 27 union locals representing 105,000 employees—80% of Kaiser Permanente’s unionized workforce. The partnership was born as a response to financial difficulties faced by Kaiser Permanente during the 1990s, which drove innovation in improving the quality of care while simultaneously cutting costs. As Kaiser Permanente has grown in physical facilities and lives covered, and its quality ratings have risen, it has arguably been seen as a model for the more integrated systems of healthcare delivery anticipated to be the likely adaptations that the U.S. healthcare industry will need to make to meet the PPACA’s mandates on cost and quality. The partnership was at the heart of the changes in Kaiser Permanente, and it has been well studied within academia. The authors come from each side of the partnership—Kaiser Permanente management and union leadership—and have been intimately involved in its origin, growing pains, and successes.

Additionally, this chapter will review the challenges facing the healthcare industry and the labor movement, the paradoxes that must be engaged to innovate, and several of the notable innovations accomplished by the Labor/Management Partnership (LMP).

Current State of the Healthcare Industry and Labor Unions

Healthcare Industry: Current Challenges and Misconceptions

On March 23, 2010, President Barack Obama signed the PPACA into law. The intended outcome of the legislation is to provide mechanisms through which uninsured individuals in the United States can secure access to healthcare insurance. It is the most significant expansion of U.S. healthcare since the advent of Medicare in the 1960s. In April 2014, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimated that the PPACA will reduce the number of individuals without insurance by 26 million by 2024 (Congressional Budget Office, 2014). This is a dramatic change. Before the advent of the PPACA, it was estimated that more than 46 million Americans did not have basic health coverage. Because of these numbers, the law represents a significant capacity challenge to healthcare organizations across the country, potentially stressing an infrastructure that already faces issues with overcrowded emergency departments and a lack of a truly integrated healthcare delivery model. Hospitals and health systems must do their best to provide high-quality and safe patient care in an environment of declining reimbursement and rising costs. Kaufman (2011) estimated that as a result of the PPACA, most healthcare systems will be required to reduce their current cost structures by 10–15%. Specifically, Medicare payments to hospitals will be reduced under PPACA if they are unable to reduce their readmission rates for selected high-cost ailments; experience avoidable hospital conditions, such as patient falls with injury or nosocomial infections; or find themselves in the top quartile of facilities with defined avoidable hospital-acquired conditions. Such PPACA mandates regarding quality will compel hospitals to focus their attention on the most costly areas of traditional inpatient stays and identify ways to provide high-quality care at lower costs.

Although the benefits of the PPACA landmark legislation could affect millions of uninsured Americans, the responsibility for ensuring the continued viability of today’s healthcare institutions rests with its leadership and diverse partnerships with nontraditional organizations such as labor unions. Even before the advent of the PPACA, Morrison (2000) suggested that the lack of effective leadership is the largest issue facing healthcare organizations in the new millennium. Effective and competent leadership and diverse partnerships are essential to overcoming the challenges presented by healthcare reform and the PPACA.

It is perhaps worth noting that, although the PPACA does contain mandates on healthcare quality, its mechanism for driving quality improvements is largely through reforms in the structure of payment for care—what gets paid for and how. For instance, if a hospital’s patients suffer from pressure ulcers—a symptom of poor-quality care, because patients with pressure ulcers have in general not been well-enough attended by the staff who are charged with checking on them and moving them frequently—that hospital will not receive reimbursement from the Centers for Medicare and Medicare Services (CMS) for the care of that condition. If a patient acquires pneumonia while in the hospital, the hospital—not the patient’s insurer or own finances—must pay for the resulting treatment of pneumonia. These reimbursement changes shift the financial and quality model of health care from volume and fee-for-service to a more value- and outcomes-based reimbursement model. The shift from volume to value is a significant one because it requires new ways of partnering among providers, insurers, hospitals, and communities to achieve significantly better and more affordable care outcomes. The PPACA has been structured to push more payment toward proactive and integrated care models to encourage the U.S. healthcare industry to evolve toward a focus on wellness and prevention rather than on sickness and cure. Reforms in care quality, including scientific advances, are anticipated to be a by-product of payment reform and the pressures on the system from the expected influx of newly insured people, as well as to be self-reinforcing as the law and its effects continue to roll out. Regardless of any new legislation that might overturn the specific mandates of the PPACA, the healthcare industry has begun the shift to value-based care. To meet the new pressures of affordability, quality, and population health, organizations must work together, in partnership, to innovate solutions for the industry. This affords management and labor new opportunities to develop collaborative relationships; some would argue that it requires interdependency. Without this, it will be impossible for either entity to be successful in navigating the new reality of healthcare reform.

Labor: Current Challenges and Innovation

Today’s context for considerations of partnership and innovation as trade union strategies is highly dynamic and complex. The challenges are stark: unions represent just 6.7% of workers in the private sector (Henwood, 2015), down from a peak of about 35% in the mid-1950s. Throughout the 20th century, unions engaged in collective bargaining with employers to negotiate and improve wages, hours, and working conditions for their members. For decades this model proved successful, allowing unions to create good jobs and standards of living for their members. Today, with union membership at its lowest level since the Great Depression, “traditional collective bargaining has all but vanished from the economic landscape—taking raises, benefits, job security and much of the American middle class with it as it goes” (Meyerson, 2013). Although unions represent 35.7% of public sector workers, recent attacks from political opponents have rolled back public sector union rights in traditional union strongholds such as Wisconsin and Michigan. In its 2014 ruling on Harris v. Quinn, the Supreme Court decided that home-care workers do not have to pay any fees to the unions representing them, stripping them of rights enjoyed by other public sector workers (Greenhouse, 2014). Not just within the healthcare industry, employers (both unionized and nonunion) do not typically look to unions as drivers of innovation; in fact, they too often characterize them as obstacles to change. The economic backdrop for this set of challenges is profound income inequality and wage stagnation, characterized by a growing economy in which working people are not reaping financial rewards for the productivity gains they are helping to achieve for the organizations they work for. Couple these macroeconomic trends with the attendant loss of collective voice, security, and respect that unions help create at work, and the results resemble the broader conditions in which the kind of workplace speak-up culture required for creating innovation is suppressed. Detert and Edmondson (2007) describe how in environments in which workers are forced to focus on their own self-preservation, “we found the innate protective instinct so powerful that it also inhibited speech that clearly would have been intended to help the organization.” This is one dynamic that places a divide in how organizations and workers partner to create novel solutions and can specifically affect how well healthcare organizations can adapt to the changing environment of quality and cost.

At the same time, in the context of the environment previously described, the labor movement has responded with a willingness to experiment with a broad and vibrant array of revitalization strategies. Labor is embracing innovation and adapting to current challenges through novel operating structures. Worker centers, such as the Restaurant Opportunities Center, the National Domestic Workers Alliance, and the National Guest Worker Alliance, do not yet engage in collective bargaining, but they nevertheless advocate for and give voice to workers in various industries, including winning economic judgments for workers from employers. Unions are also leading broad-based, long-term campaigns to raise standards of living for low-wage workers. The Fight for 15, which calls for a wage of $15 per hour and the right to form a union, is mobilizing workers, often through strikes, in industries including fast food, warehousing and logistics, and home care. Strikes (legally protected actions in which workers withhold their labor) were an integral part of how the labor movement grew strong in the middle of the 20th century in the face of massive, and sometimes violent, resistance from U.S. industry. Geoghegan (2014) describes a major distinction between the often open-ended, lengthy strikes that helped shape industries such as auto, steel, and mining and today’s quick and broadly distributed actions targeted at the low-wage service sector. The latter “did nothing to move McDonalds. But these losses put the issue at the top of Obama’s 2014 State of the Union address” (2014, p. 37). And unions have helped lead coalitions that won new $15 per hour minimum wage laws in cities including Seattle, San Francisco, and Los Angeles, which will apply not just to union workers but also to the community at large.

David Rolf, president of Service Employees International Union (SEIU) Local 775, is explicit about the imperative for organized labor to embrace innovation:

Progressives should take a cue from business and enter an era of innovation, leveraging labor’s significant institutional resources to create organizations dedicated to studying the future of organizing and work . . . By striking out into complexity instead of retreating back to what is familiar, progressives can seize this moment of crisis and win enormous victories for workers. However, labor and its allies must be willing to experiment with new models outside traditional collective bargaining, even outside the traditional idea of a union. (2014, para. 7, 13)

The labor and management relationship in health care has had some history of adversarial encounters. Nursing and other healthcare worker strikes or work stoppages have created some polarizing opinions from healthcare professionals, organizations, and patients questioning the intent and operations of organizations and the represented workforce. Traditionally, both labor and management have relied on primarily linear leadership practices that focused on singular interests, like pay, benefits, and work hours, and tried to achieve them by inaction (stalled negotiations, refusal to discuss issues, and inflexibility) or overaction (reductions in negotiated benefits, command-and-control management, work stoppages, and negative ad campaigns). Many situations do not yet possess the conditions for exceeding this traditional zero-sum, adversarial approach. Such an approach, although it may produce short-term gains for either party, may have inherent limitations in the context of the cost and efficiency pressures described by Berwick (2011) in his speech to the Institute for Healthcare Improvement:

Our nation is at a crossroad. The care we have simply cannot be sustained. It will not work for health care to chew ever more deeply into our common purse. If it does, our schools will fail, our roads will fail, our competitiveness will fail. Wages will continue to lag, and, paradoxically, so will our health.

The choice is stark: chop or improve. If we permit chopping, I assure you that the chopping block will get very full—first with cuts to the most voiceless and poorest us, but soon after to more and more of us. Fewer health insurance benefits, declining access, more out-of-pocket burdens, and growing delays. If we don’t improve, the cynics win. That’s what passes the buck to us. If improvement is the plan, then we own the plan. Government can’t do it. Payers can’t do it. Regulators can’t do it. Only the people who give the care can improve the care.

Therefore, we argue that when and where the right conditions exist, innovative partnerships and more evidence-based, interest-based, and innovative leadership practices will result in a better healthcare system where workers, organizations, and patients benefit from better quality, cost, and care.

In this context of a spectrum of experimental strategies for organized labor, the labor–management partnership at Kaiser Permanente provides an intriguing model of what is achievable through collaboration focused on shared improvement and innovation goals, as well as an example of how unions and employers can, under the right conditions, exceed rather than discard traditional collective bargaining in the pursuit of common interests.

Healthcare Industry: Innovation

U.S. health care and labor intersect in an unpredictable and dynamic environment, including patients, payers, providers, suppliers, and each other. These intersections provide a focused lens to examine how evidence-based innovation can occur when tension, environmental factors, and complex connections are acknowledged and leveraged for success. Given the scarcity of resources and a global economy that is far from stable, health care and labor separately and together face significant challenges driving a need to innovate. For management and labor, traditionally engaged in an adversarial relationship, coming together in partnership to tackle shared challenges could be seen as a kind of top-level, disruptive innovation from which a cascading series of innovations can follow to most effectively respond to such challenges.

To discuss diverse partnerships that drive innovation, we must have a common definition of healthcare innovation. Thakur, Hsu, and Fontenot defined healthcare innovation as the

adoption of those best-demonstrated practices that have been proven successful and implementation of those practices while ensuring the safety and best outcomes for patients and whose adoption might also affect the performance of the organization. In other words, innovation in health care is defined as those changes that help healthcare practitioners focus on the patient while helping healthcare practitioners work smarter, faster, better, and more cost effectively. (2012, p. 564)

Healthcare innovation can take many forms, and although it is widely perceived and accepted to be a positive outcome, it carries a number of trade-offs and paradoxes. These trade-offs and paradoxes are best addressed by partnerships between groups that can coadapt to the unpredictable environment.

Innovation does not necessarily follow a logical and sequenced series of well-rationalized steps. It is important for leaders to recognize this and work to identify new approaches in the identification, adoption, and spread of innovation in health care. Dixon-Woods, Amalberti, Goodman, Bergman, and Glasziou (2011) identified three paradoxes that innovators in health care specifically are likely to encounter (BOX 15-1).

BOX 15-1 Paradoxes of Innovation in Health Care

Paradox 1: Uptake of the dubious, rejection of the good; adoption without evidence

Paradox 2: The wisdom and failings of democracy; stopping innovation through collaboration

Paradox 3: Health systems are never able to keep up; change as a barrier to change

Data from Dixon-Woods, M., Amalberti, R., Goodman, S., Bergman, B., & Glasziou, P. (2011). Problems and promises of innovation: Why healthcare needs to rethink its love/hate relationship with the new. BMJ Quality & Safety, 20, i47–i51.

Paradox 1: Adoption Without Evidence

Paradox 1 addresses the phenomenon of why some new practices are quickly adopted and spread, even though there is little or no empirical evidence that the practice is effective, or even safe, while other practices from which patients could benefit are never adopted, let alone spread. There are a number of reasons why this may occur. The innovation may simply be the latest fad—that must-have practice or product that is so new that no evidence yet exists to support or refute it. This can often be the case with technology; new technologies experience increased hype as they enter the market, but they may not perform as expected while adoption increases. Adopters and resisters demonstrate several behaviors as new practices are introduced into the environment. Sometimes adopters defend their decision to adopt by pointing out that the innovation is better than doing nothing. Or perhaps the innovation does offer some modicum of face validity or intuitive appeal as a possible solution to the problem, so adoption provides a degree of defense against the accusation of doing nothing. The risk of action without evidence can sometimes work in opposition to the values of healthcare workers, such as do no harm.

Each of these reasons for succumbing to paradox 1 poses the risk that an organization will adopt processes or products that have yet to be fully vetted for efficiency or effectiveness. Conversely, innovation under paradox 1 could result in a failure to spread practices that have been proven effective. As a result, there is potential risk to the organization and its staff members; physicians; and, most important, the patient. At the very minimum, an innovation under this paradox could result in the disruption or displacement of other beneficial efforts. With paradox 1, innovation crowds out others fighting for a place in a landscape of limited resources, both human and capital. An unproven and hastily implemented solution can crowd out a proven or even yet-to-be proven but better solution.

Paradox 2: Stopping Innovation Through Collaboration

Paradox 2 speaks to innovation through collaboration. Dixon-Woods and colleagues (2011) assert that, although collaborating with other professionals may be an effective way of ensuring implementation and spread of an innovation, it may also be one of the most effective ways of stopping it.

The benefits of actively involving those individuals most likely to be affected by the proposed innovation and who are the most knowledgeable about the situation that the planned innovation is designed to address are apparent, including better-informed decisions and greater collective buy-in to the implementation. Actively involving subject matter experts also increases the identification of further opportunities for innovation. This social movement approach and the role of self-organizing and self-governing networks is gaining popularity in numerous settings and is gaining momentum particularly within the healthcare setting. It promotes the self-management of change, and it works well when the problems being addressed are well-known to the organization and individuals involved. In the healthcare industry, where one is attempting to change the practice of professionals, this social movement approach works well. Professionals are educated and prepared to manage their own clinical practices, which can create a negative reaction to being required to do new practices that do not originate from the individual professional. To overcome the potential resistance of dictating innovation through a hierarchy, leaders can use the social movement approach because the individuals designing and implementing the innovation are the same as those who will have to use the innovation.

Although there are many advantages to the social movement approach, it also presents its share of threats to successful innovation. Group-based, collaborative efforts like this can be and are often undermined from within the group. One of the most common innovation-stopping issues the social movement approach creates is the failure to engage stakeholders in the change process. Another threat occurs when an individual attempts to substitute his or her own agenda for the greater good of the organization and those it serves. Thus, it is critical that the innovation process be as transparent and inclusive as possible. Transparency and inclusiveness can serve to isolate and marginalize an individual who is obstructing the will of the group. Although a social movement approach to innovation in health care has been shown to be particularly successful when engaging professionals like nurses and technicians, professional boundaries and scope of practice law can be another source of contention and possible derailment.

Paradox 3: Change as a Barrier to Change

Paradox 3 is rooted in the fact that improvement requires change, and change will always create its own set of challenges. Quality improvement systems are notoriously unable to keep up with the pace of innovation. By its nature, innovation is a disruptive activity, and by the time quality improvement catches up with the innovation, things have usually changed—again. Failures in the evaluation process can only intensify this problem. The evaluation process is often too narrowly focused on a specific intervention while failing to capture the systemic effects and unintended consequences of the innovation.

The Paradoxes in Summary

In this section we examined the challenges associated with innovation in today’s complex and volatile healthcare environment. Dixon-Woods and colleagues (2011) identified three paradoxes—the problems and promises—of innovation. Paradox 1 is innovation for the sake of innovating. In some cases, the innovation that is promoted and adopted is without empirical evidence that it will achieve what it seeks to accomplish. Perhaps the innovation is accepted out of pure desperation or simply to do something, which is believed to be better than doing nothing. Innovation linked to paradox 1 potentially places the entire organization, its patients, and its staff at risk by either producing direct harm or by crowding out alternative, more beneficial innovation.

Paradox 2 considers innovation though collaboration. While the authors contend that this form of innovation may result in better outcomes as the result of active involvement of subject matter experts promoting a motivation for the spread and adoption of the innovation as the result of social mechanisms, it too has problems. Innovation under paradox 2 may result in the undermining of the innovation if the members of the collaborative fail to engage or they substitute their own agendas for the innovation, thereby effectively derailing constructive and meaningful change.

The final paradox cited by the authors considers innovation as disruptive change. Innovation and improvement is change. The issue, however, is that the normal quality improvement processes central to the healthcare industry are always lagging the innovation. By the time the quality improvement processes catch up to the innovation, new change has occurred, and the quality improvement cycle must start all over. BOX 15-2 outlines the considerations for proactively addressing these issues.

BOX 15-2 Innovation in Health Care: An Agenda for Action

Assess innovation risk and reward for all innovation activities.

Develop processes for assessing innovation and technology value to the organization.

Evaluate innovation in real time, including how the innovation is affecting outcomes.

Use social science to evaluate pilots as the innovation test of change is in progress. Focus on what resources might be needed to implement the innovation in a production environment.

Clearly define the roles involved in innovation work and use formal leadership structures to facilitate and manage frontline workers, patients, and other stakeholders in the process.

Identify unintended impacts of innovation by using a variety of research methods, including clinical trial methods, before spreading innovation across an organization.

Develop innovation competencies through education, training, and experience to help overcome the barriers to change.

Adapted from Dixon-Woods, M., Amalberti, R., Goodman, S., Bergman, B., & Glasziou, P. (2011). Problems and promises of innovation: Why healthcare needs to rethink its love/hate relationship with the new. BMJ Quality & Safety, 20, i47–i51.

Evidence-Based Partnerships in Innovation: The Kaiser Permanente Example

The partnership between Kaiser Permanente and the Coalition of Kaiser Permanente Unions (the Coalition), started in 1997, has established itself as the longest-lasting and most successful labor–management partnership in the United States. This comprehensive partnership, which is defined in the national agreement between the parties as a strategy for operational collaboration at every level, has built a track record of success in performance improvement. It provides a number of different mechanisms and processes for interaction between labor and management at every level of the organization—national and regional down to the local facility levels—and each provides for extensive engagement and decisions made by consensus.

Hal Ruddick, the executive director of the Coalition, positions the partnership in the context of a trade union legacy of advocating expanded access to health care:

Our partnership is about providing the best care and quality. In that way, it’s in the tradition of the historic mission of the American labor movement, which includes ensuring quality, affordable health care for working families. We are able to do that without sacrificing good jobs with good pay and benefits. Many other affordability strategies sacrifice either quality or good jobs, or both. Our strategy is based on high-quality care, good jobs and affordability. (H. Ruddick, personal communication, June 2, 2015)

In his remarks to the Coalition’s annual Union Delegates Conference in 2015, Chokri Bensaid, the Kaiser division director from the Coalition’s largest local union, SEIU United Healthcare Workers West, characterized the partnership as creating tripartite benefits that go far beyond the immediate self-interest of union members:

When we do things like bargain the best benefits in the country, we don’t just do right by our members. We set the bar in our communities. We set the bar in our industry. The Kaiser contract is the contract every healthcare worker aspires to have. And every time you improve that, you inject a little bit of hope in the lives of those working people who aspire to have the same contract . . . We’re dealing with waste, we’re dealing with improvement of workflow, we’re dealing with creative ways of delivering care and being more personal to our patients, and when you cut waste out of the system, the company wins, we win, and the patients win. (Bensaid, 2015)

At the facility level, where the care meets the patient, unit-based teams (UBTs) are groups of frontline workers, managers, and physicians in a given natural work department (such as a medical–surgical unit, pharmacy, or environmental services department) who work together on improvement projects. Using the Rapid Improvement Model (RIM), UBTs identify issues in their departments, review data together, and develop goals for improvement. This process of continuously generating and evaluating data helps avoid the pitfalls of paradox 1, adoption of an innovation without evidence, because the evidence for or against a given innovation arises nearly in real time.

The UBT goals are informed by the core values of the partnership, which are working together with a focus on the patient or member to achieve the best quality and service, and to make Kaiser Permanente both the most affordable care provider and the best place to work. In the decade since UBTs were first negotiated and implemented, Kaiser Permanente has grown into an industry leader in quality and service. At the same time, the industry-best wages, benefits, and working conditions bargained for by the Coalition and enabled by this partnership serve as an example to other unions and employers as a potential standard and even a counterexample to the cuts and reductions characterizing much of the rest of the national collective bargaining environment.

The most thorough history of the first decade of this partnership is provided by Kochan, Eaton, McKersie, and Adler in Healing Together (2009). The authors describe the traditional collective bargaining relationship between labor and management, according to federal law through the National Labor Relations Act, as by definition adversarial, with “a clear line of demarcation” (2009, p. 22) between management’s rights to run an organization and labor’s rights to bargain over the impact of changes to hours, wages, and working conditions. “Such efforts are restrained by twentieth-century thinking about how work is organized, organizations are structured, and goods and services are produced and delivered” (2009, p. 23). In contrast, the partnership at Kaiser Permanente reflects more current thinking:

Rather than dividing people into management and labor camps, contemporary models of work organization stress teamwork among people who bring different, specialized knowledge to bear at tasks at hand. That is the potential creativity that labor–management partnerships in general and the KP [Kaiser Permanente] Labor–Management Partnership in particular, seek to mobilize. (2009, p. 23)

With a foundation of approximately 3,500 UBTs covering virtually every department in Kaiser Permanente that employs members of the Coalition, this partnership has built a solid foundation based on improving established work processes. At the same time, it provides intriguing examples and opportunities for how such a collaborative strategy can be leveraged to implement more extensive innovation as well.

A review of the literature reveals both evidence of the efficacy of the labor–management partnership at Kaiser Permanente and examples of the ways that other healthcare unions and their employers have charted their own courses to collaborate to achieve shared interests. These examples show a growing critical mass of experience and proficiency in partnering around performance improvement and glimmers of what might be possible with increased focus on similar efforts to collaborate on innovation.

Adler and Heckscher (2013) situated Kaiser Permanente in the context of the challenges of organizations operating in complex environments to perform both in terms of innovation or flexibility and efficiency or control. This tension describes well the dynamics that healthcare organizations face. The authors characterize high performance in both domains as ambidexterity: “the ability simultaneously to exploit existing capabilities and to explore new opportunities” (2013, p. 35). Organizations dealing with complexity that are not able to develop an integrated approach to this dynamic are likely to be mired in mediocrity. According to Adler and Hecksher, ambidextrous organizations synthesize mechanistic and organic approaches through a collaborative model, a form that

is not only a better mix, but also outperforms one-dimensional organizations at their own games. That is, an effective collaborative system is better at efficiency than a bureaucracy, because it engages members in continuous improvement and problem-solving; and it is better at innovation than a market or decentralized bureaucracy, because it coordinates knowledge more effectively across a wider scope. (2013. p. 43)

In their case study of Kaiser Permanente, Adler and Heckscher cite the labor–management partnership as one example of how the company has met its ambidexterity challenges, supporting the implementation of both management-driven initiatives and frontline improvement ideas, along with the spread of lessons and best practices (2013, p. 45). Kaiser Permanente has achieved “dramatic improvements both in exploration and exploitation dimensions” (2013, p. 47), performing at the top of the industry in core outcome measures and having developed “an impressive capacity for radical innovation” (2013, p. 47).

In a separate study, Lazes, Katz, Figueroa, and Karpur (2012) observed the labor–management partnership between Montefiore Medical Center and 1199 SEIU in the Bronx, New York, finding a similar interplay between disruptive innovation and adaptive change. Disruptive innovation “enables organizations to create new systems of care, products, or services” (2012b, p. 150), whereas adaptive change “is based on incremental changes that optimize current processes or services by improving efficiencies and eliminating waste. The use of the adaptive change approach can be instrumental in standardizing new processes and procedures that were initially created by a disruptive change approach” (2012, p. 150).

The study focuses on Montefiore as an example of an organization that, in its efforts to become a more fully and deeply integrated care delivery system, is pursuing both disruptive and adaptive change models. The strategy is based partly on increasing prevention and care management efforts to reduce costly hospitalizations—like the labor–management partnership at Kaiser Permanente, perhaps showing a way forward for the entire U.S. healthcare industry as it struggles to adapt to the mandates of the PPACA. Critical to the strategy’s success at Montefiore’s Contact Centers has been a “comprehensive labor–management partnership to help design and implement new work systems to provide not only a positive customer service experience for patients and providers, but an exceptional work environment for staff as well” (Lazes, Katz, Figueroa, & Karpur, 2012, p. 160).

This capacity to absorb and balance both disruptive innovation and adaptive change through the flexibility of its collaborative processes is how the LMP at Kaiser seems to have largely avoided the pitfalls of paradox 3. Labor and management collaborate at every level of the organization, from top leadership down to the unit level and back up through the hierarchy, with information flowing freely not only upward and downward, but laterally. The RIM used by the UBTs allows the most disruptive innovations to be incorporated in the most intimate ways into the basic everyday tasks involved in direct patient care. RIM and UBTs render ideas of change from abstract concepts to concrete procedures and are able to make the necessary adjustments, or adaptive changes, at that level.

Nixon’s study of UBTs at Kaiser Permanente (2012) demonstrates the correlation among staff engagement, team performance, and team development. Kaiser Permanente measures staff engagement through an internal survey called People Pulse. With its database of UBTs, called UBT Tracker, which documents teams’ activities and accomplishments, Kaiser Permanente can analyze both team performance on operational goals and team development as measured by an internal rubric called the Path to Performance. The study revealed the link between team development (ranked on a five-point scale ranging from foundational to high performing) and a dozen measures of staff engagement, including perceptions of how a department operates effectively as a team and staff understanding of how their jobs contribute to organizational goals. The data demonstrates the connection between staff engagement and performance on key operational metrics. For instance, staff perceptions of more efficient work procedures in their departments correlate to lower hospital mortality rates and greater patient satisfaction with the hospital experience. Similarly, higher levels of comfort among staff in raising ethical concerns to their managers link to significantly lower staff injury rates. The study makes a compelling case that investment in supporting and nurturing UBTs can drive changes in workplace culture that can lead to improved performance.

Lazes, Katz, and Figueroa (2012) looked at both Kaiser Permanente and other healthcare systems as evidence of how labor–management partnerships can produce improved clinical outcomes, better work environments, and cost savings. They concluded that “the involvement of healthcare unions, including both leaders and members, in restructuring initiatives affecting the entire delivery system yields concrete clinical improvements. Further, such improvements are directly linked to increased involvement of front-line healthcare workers in the process” (2012, p. 5). Here, too, we see evidence of improved operational performance through partnership and hints of what might be possible with an increased focus on partnering for innovation. The authors examined a number of UBTs at two Kaiser Permanente medical centers: San Rafael and San Diego. For example, in its broader efforts to improve workplace safety and reduce injury rates, the San Rafael Clinical Lab Scientist (CLS) UBT tackled lab design. The CLS UBT “has harnessed the insight of its staff members to transform a department into a safe and efficient workplace designed by its staff, for its staff” (2012, p. 16). The authors observed that the two unions at Kaiser Permanente San Rafael, through their work with UBTs, “have become more engaged in discussions around remodeling and have taken an active interest in technology issues” (2012, p. 18).

At Kaiser Permanente San Diego, the Emergency Department UBT developed and implemented a system for team communication to support adoption of a new technology: “Using a communication tree and a training tracking system to support their work, the team increased the percent of staff that had access to and were trained in iNotes from 10 percent to 94 percent from May to July 2010” (Lazes, Katz, & Figueroa, 2012, p. 28). Finally, the characterization of the labor–management partnership at Kaiser Permanente San Diego describes some of the conditions that are necessary for enabling not just joint performance improvement but collaboration to innovate as well: “UBT work has enabled employees to access and understand key financial and operations data, allowing for a more engaged and effective workforce” (2012, p. 29).

Looking again at examples outside Kaiser Permanente, Lazes, Katz, and Figueroa (2012) find value in the collaboration between Fletcher Allen Health Care and the Vermont Federation of Nurses and Health Professionals, American Federation of Teachers. This partnership is focused on Model Unit Processes (MUPs), a negotiated “innovative process whereby nurses and unit managers would meet to analyze the needs of patients and determine appropriate staffing levels by unit” (p. 33).

MUPs, which are analogous in some ways to Kaiser Permanente’s UBTs, are the vehicle for nurses and their managers in given departments to “become involved not only in determining appropriate staffing levels but also in influencing the way in which units function at Fletcher Allen through the redesign of care delivery and work processes” (2012, p. 33). As an example, the parties worked together to address an overreliance on traveler nurses, a practice that both eroded union jobs and ran up hospital costs.

In 2006, Fletcher Allen employed at least 125 travelers. The MUP teams pursued new ways of giving nurses a voice in the workplace and made specific changes to work environment and clinical practices. As a result, conditions at Fletcher Allen began to improve. At the time of publication, no travelers have been hired, open positions remain limited, and the hospital boasts a low nursing turnover rate. (2012, p. 40)

The SEIU reports on its National Hospital Quality Initiative, which was launched in 2014 to expand and strengthen its labor–management partnerships with a range of different local unions and their respective employers (Service Employees International Union, 2015). Each appears to ground its partnership in its own particular culture, experience, and strategy. For instance, SEIU Local 721 and Los Angeles County’s Department of Health Services have created Care Innovation Teams (CITs) focused on reducing patient wait times and improving the patient experience in ambulatory settings. At Los Angeles County’s Martin Luther King Jr. Outpatient Center, staff and managers in the hematology–oncology department were able to reduce wait times, from registration to taking vitals, from 23 minutes to 3 minutes (Service Employees International Union, 2015). In Miami, SEIU Local 1991 and Jackson Memorial Hospital have partnered to improve safe patient handling; they project $9 million to $13 million in annual savings from their project (2015). SEIU has established a National Learning Collaborative to share lessons and best practices from these various partnership experiences.

Although a partnership between labor and management is far from the industry standard, an increasing body of evidence shows that a diversity of approaches to collaboration among unions and their employers has yielded measurable improvements in targeted areas of focus, including quality, service, affordability, and staff satisfaction. As healthcare systems and unions grapple with increasingly complex competitive, clinical, and financial challenges, this model of partnership may be particularly suited to the imperative to simultaneously exploit existing capabilities and strike out into uncharted areas of innovation.

Innovation in Partnership and Solidarity: The Electronic Healthcare Record Background and Implementation

Regulations and incentives within the PPACA that are meant to push the entire U.S. healthcare system toward electronic medical records (EMRs), both to cut costs and increase efficiency and effectiveness, have already gone into effect. This is another arena in which Kaiser Permanente has led innovation within the industry as the first major health system in the country to roll out a comprehensive EMR. At Kaiser, pressures to create this system came separately from the very top, at the chief executive officer (CEO) level, as well as organically from the grass roots, the bedside nurses on the front lines of patient care. The LMP can be seen as the metaphorical meeting-in-the-middle point, where the vision from above and the knowledge from below intersected in a productive manner. It provided the processes and methodology to translate overarching vision and everyday knowledge into practical design and implementation.

The account from the grass roots is carried by Kathy Sackman, RN, former president of the United Nurses Associations of California/Union of Health Care Professionals (UNAC/UHCP), who recalls a project within Kaiser Permanente in the late 1990s where paper charts were replaced with flow sheets so nurses could document patient care information faster and in fewer places. “At the time,” said Sackman, “some individual Kaiser Permanente hospitals in Southern California had internal computer systems that were being used for outpatient care. As soon as we started that patient documentation project, the nurses began asking when we were going to go electronic with our charts” (Kathy Sackman, RN, personal communication May 4, 2015). Successive CEOs near the latter end of the same period had similar ideas. Dick Pettingale, Kaiser Permanente California Division president from 1999 to 2002, worked on developing such a system. Pettingale’s replacement in 2002, George Halvorson, scrapped Pettingale’s EMR to bring in a system he had already worked with called EPIC. This became the new basis for Kaiser Permanente’s eventual in-house product, HealthConnect, which rolled out in selected California facilities in 2003.

The government mandate for all health records to go digital would not come until 2004, but Halvorson believed that a patient who visited Kaiser Permanente in any area of the country should have the same experience, with the same access to medical records, as any other. In 2002, a patient in such a situation would have had to get paper copies of all files and take them to any other Kaiser Permanente location, even in the same region, for providers to review them. In addition, inpatient care within the hospital was not connected to outpatient care that might take place in the emergency room or outlying clinics. The challenge was not just to share information internally but also across the continuum of care.

Another challenge was that some of the technology necessary to make it all possible did not yet exist. Plenty of computer and information technology (IT) professionals could write a computer program for a pop-up box to be shown on a screen or code a universal chart to be shared electronically. But there was no health IT specialty, and any technology expert had a steep learning curve when it came to understanding the healthcare side of the workflow. In addition, it was impossible to rewire many old hospitals, constructed decades before local area networks and the Internet, to share information electronically. Wireless technology, though not yet in widespread use, became the only option for sharing information within most hospitals and clinics.

Three groups of workers needed to be involved to get the EMR project off the ground: clinicians, the people who would actually use the system; business representatives, who needed to look at it from a financial perspective and determine how to change Kaiser Permanente policies to support it; and IT professionals, who needed to develop the technological infrastructure. The collaborative model from the partnership was absolutely critical to fitting all the pieces together.

HealthConnect development went through three layers of decision making. The top level was the national development validation and build delegation sessions, made up of a small group from every region, who worked to ensure that the experiences from every Kaiser Permanente region would be homogeneous. Below that was the regional development build group, modeled after the larger group structure. One representative from every emergency department in Southern California attended the regional build validation sessions, for example. Staff educators were involved, as well as local management across all regional facilities. Finally, at the local level, representatives from different units and worker groups across a single Kaiser Permanente health center participated. This allowed local staff member to give their input into how the final product would look. The meetings included employees performing a variety of jobs to be certain that all who needed to provide input would be on one of the build teams. One representative from each local facility then represented that facility at the regional build meetings. A three-level review process gave all who were affected the chance to correct problems before implementation.

Although HealthConnect carried the blessing and mandate of Kaiser Permanente’s CEO and top leadership, there was significant initial resistance from those management level staff that comprised the national team working to build the system—an example of paradox 2 in action. Getting the frontline nurses involved at that level was crucial in changing this dynamic. Those nurses already involved pushed for inclusion at the highest levels so that those who would be interacting with the system the most could help build it. UNAC/UHCP president Kathy Sackman, RN, went to bat for the nurses in conversations with top leadership on the management side. Before long, nurses were sitting at the national table discussing the practicalities of how to make HealthConnect function from a worker standpoint.

“The partnership is a commitment by the employer and by the unions that the workforce will be involved,” according to Sackman. “It’s recognition that the employer understands that the workers know how to do the work and have ideas on how to do it better. They know how to eliminate waste in the system” (Kathy Sackman, RN, personal communication, May 4, 2015). With a project of this scale, designed to affect the workflow of every staff member who interacts with patients, engaging with the workforce from the very beginning was a necessity.

One nurse on the national build team, Troy Seagondollar, RN, ultimately became the lead for the Kaiser Permanente Southern California rollout. Even as a working RN he had an interest in health informatics. His position was a unique hybrid creation and embodiment of the LMP. He came out of the labor side, as a UNAC/UHCP-represented RN. Even during the project, his office was housed at UNAC/UHCP’s headquarters, and he served as liaison for the Coalition of Kaiser Permanente Unions. Yet his salary was paid by Kaiser Permanente.

When it came time to do the rollout in the Southern California region, Seagondollar met with the nurse executives at each medical center to plan training. He explained how many people needed to be trained to do peer-to-peer support, by different job type. These workers who were trained would then explain to others with the same job type what HealthConnect was, how it worked, and how it would affect their job flow. There was training and some measure of selling the new EMR. This allowed innovators to train a wide range of people, engaging all workers in the process.

Finally, when the rollouts of HealthConnect began, there was another process implemented to help achieve success. This work would start 90 days before going live and continue for 6 weeks after the launch. Three teams would go into a medical center to do a readiness survey: IT, Kaiser Permanente HealthConnect Leads, and Deployment Support. The first team of IT workers ensured that the necessary equipment and the technical infrastructure was in place to support using the EMR. The Kaiser Permanente HealthConnect Leads worked with management to assess and mitigate the perceived impact. In addition, they would ensure congruence between local policies and procedures with expected workflow changes after the deployment of the EMR. The third team, Deployment Support, performed education and training sessions. In this phase, local staff subject matter experts would be selected to assist with the training and support of their respective peer groups; for example, nurse to nurse, lab tech to lab tech, manager to manager, provider to provider. In most instances, a team of nurses was brought together to form a nursing informatics team.

This team’s charter was to continue to support their colleagues after the Deployment Teams left. The deployment of HealthConnect in each health center was just the beginning. Those who had done the peer-to-peer support during rollout were now back to their regular jobs and were embedded. When workers had problems with the system, they knew exactly who to ask for help. The clinicians were also free to keep suggesting ways to optimize HealthConnect. Those who did peer-to-peer support became change agents. They still attend regional meetings and continue working to improve HealthConnect. Their position has transitioned from the initial period of disruptive innovation into the current period of adaptive change, creating a helpful continuity from one phase to the other.

Ongoing Innovation

Although paradox 3 codifies the risk that change that moves too rapidly can become a barrier to further change, well-managed innovation, conversely, opens up numerous pathways to subsequent innovation. HealthConnect has not just given different clinicians who are updating or reviewing a patient’s records instantaneous access to the same information. As technology has leaped ahead, it has now allowed patients to review their own information on both the Kaiser Permanente website and a mobile app. Patients can access test results and even submit photos to aid in diagnosis, as well as exchange e-mails with their care provider or a nurse who handles patient advice.

Currently, clinicians are limited to using the EMR at desktop computers, though much of their work happens away from the desktop. A newly formed Nurse Innovation Team is working on how to make the EMR mobile, whether through tablets or other mobile devices yet to be invented. This opens up multiple questions that will need to be worked through in partnership. For example, after critical information is mobile, how can it be shared with all the care providers who need to see it? What information should be sent under given scenarios, and how can it be transmitted to a care provider quickly and with actionable data?

The final major innovation on HealthConnect has the potential to revolutionize the entire healthcare industry by creating a critical mass of data that can be mined for future evidence-based innovation. With years of data now in the system, it is possible to review and analyze it in aggregate to determine which treatments are most effective, separately and in combination, from exercise to medication. Clinicians will be better able to predict the progress of a given patient’s condition using vital signs, emergency room visits during the past year, and other data already entered for similar patients in HealthConnect. Kaiser Permanente can create best practices for how to use the data to anticipate a declining condition or redirect efforts toward patients who are likely to worsen. This aggregation and use of data can be used in the future as a means of heading off paradox 1, providing solid evidence of support or refutation when it comes to further innovation within the organization.

Ongoing Innovation

Leadership for Partnership and Innovation

Along the continuum from incremental performance improvement to radical innovation, a number of factors act as preconditions for effective collaboration. These include cultures and practices in which everyone, whatever their formal role, is encouraged to lead and is empowered to do so, including speaking up in an environment of psychological safety, acting and collaborating beyond the constraints of official hierarchy, and thinking with a systems mind-set. A review of recent literature highlights some of the key leadership behaviors and practices that support high performance and innovation.

Kotter (2013) speaks to the limits of hierarchy in a competitive environment characterized by an increase in both threats from a variety of directions and windows of opportunity that open and close quickly. In this context, organizations need to be structured to be reliable and efficient, and at the same time nimble and fast moving; a reliance on only the former will not allow organizations to drive the major changes that such challenges demand. People at every level of the organization need to be empowered to act and collaborate beyond the bounds of formal institutional structure. In other words, both hierarchy and network are required. Similarly, Battilana and Cascario (2013) identify the power of informal networks in driving change. In their study of change initiatives at the massive British National Health Service, they conclude, “Change agents who were central in the organization’s informal network had a clear advantage, regardless of their position in the informal hierarchy” (Battilana & Cascario, 2013, p. 64).

Within the partnership between the Coalition of Kaiser Permanente Unions and Kaiser Permanente, the parties have identified a set of 37 behaviors, organized around seven core principles, to guide collaboration (Kaiser Permanente, 2003). Each of the principles calls on managers and union stewards to take shared responsibility for various dimensions of the partnership, including ensuring the success of both parties, providing patients with a superior care experience, and engaging employees in decision making. Eaton, Konistney, Litwin, and Vanderhorst (2011) conducted a study of high-performing UBTs at Kaiser Permanente. Several findings, among other structural and process factors, stand out. They identify psychological safety as key to high performance, describing “a work environment where everyone was able to speak up and had the courage to have difficult conversations. Employees stated they could say what was on their minds without fear of retaliation or retribution” (Eaton et al., 2011, p. 11). Systems thinking is also crucial: “The most successful teams we studied were interested in how their work and performance were affected by that broader system and were working collaboratively with other departments to achieve common goals” (Eaton et al., 2011, p. 10). Among the leadership dimensions identified by the authors is a shift from traditional, command-and-control management to an approach in which “managers would work to coach and motivate employees instead of micromanaging them. They trusted employees to do their jobs. Managers of the teams stated that once they were able to change how they managed employees, their job actually became easier” (Eaton et al., 2011, p. 8). This transformation is accompanied by another noteworthy aspect of leadership: “On most of the high performing teams we studied, the labor leads—who were generally selected by the unionized employees on the unit—took on such an authentic leadership role that they became essentially interchangeable with their management counterparts” (Eaton et al., 2011, p. 8).

Finally, Bevan and Fairman (2014) provide a thorough examination of how leadership needs to shift to reflect the scope and complexity of contemporary healthcare challenges. Like other authors cited here, they identify the need to marry what they term a dominant approach, characterized by top-down leadership, with an emergent model, marked by shared purpose. The mind-set is that transformational change is more likely to happen cross-organizationally than within a single organization and that hierarchical levers cannot drive change across the wider system. From this perspective, large-scale change depends on many partners (2014, p. 18). On the emergent side, they note that “the most important skill that leaders of change need to develop for the 21st century is the ability to build partnership” (2014, p. 18).

The labor–management partnership at Kaiser Permanente reflects broader organizational and industry thinking about how collaboration and distributed leadership can help spur the kind of change and innovation that contemporary circumstances demand. At the same time, this partnership has developed its own specific practices and lessons about what is required to achieve high performance. As this partnership continues to grow and evolve, we expect that it will continue to both draw from and contribute to emerging approaches to innovation leadership.

Innovation Outside Health Care

Looking at the nexus of labor and innovation beyond health care, The Workers Lab is an innovation incubator and accelerator that was established as an answer to its founders who ask themselves, in the context of a shrinking labor movement and a growing low-wage economy, “why can’t we take the dynamism and ingenuity fueling new products, services and institutions, and harness them to advance the interests of low-wage workers? Can we channel that creativity and rigorous experimentation to address the vexing problems facing millions of American workers?” (Maxwell, 2015, para. 3).

The Workers Lab focuses on investing in “organizing strategies, business models, and platforms that will lift wages and transform the lives of US workers” (The Workers Lab, 2015, para. 1). Backed by unions and foundations, it funds a small number of projects aimed at developing and testing new approaches to achieving economic justice for workers in low-wage industries.

Among its first round of projects in 2015, The Workers Lab funded an experiment called Top Server with the Restaurant Opportunities Center (ROC) United and the Everett Program at UC Santa Cruz, which marries workforce development to advanced technology and gamification. The mission of ROC United is to address and improve the low wages and poor working conditions suffered by restaurant workers; its Colors Hospitality Opportunities for Workers (CHOW) Institute provides free job training and development for restaurant workers to move into living wage jobs. With funding and support from The Workers Lab, ROC United will be developing an online gaming platform for the CHOW. Institute’s restaurant worker members to support their efforts to develop career skills to move into higher-paying jobs in that industry.

In an article in Fast Company, The Workers Lab’s executive director, Carmen Rojas, speaks to the benefit that can accrue to employers when they provide workers with living wages and good benefits: “When these conditions are met, corporations and revenue-generating ventures experience less employee turnover and have increased customer loyalty . . . This is great for their corporations as well as for our economy” (Dishman, 2015).

Such intentional experimentation, including the application of innovation methodologies more commonly used in for-profit endeavors, such as technology start-ups or big business, represents a significant departure from traditional organizing and collective bargaining strategies and holds the potential to provide rich lessons and insights about how to achieve sustainable and scalable victories for the labor movement in a low-wage economy marked by massive income inequality and declining rates of unionization.