The passage of reform legislation launched the most significant redirection for health care since Medicare and Medicaid became reality in the 1960s. While the reform package focuses on insurance reform, embedded within the initiative is a substantial restructuring of the health care industry.

Many will say we've had lots of change initiatives in health care over the last three decades and none fundamentally altered how we operate. True enough. What makes change different this time around? Here are a couple of observations.

First, the globalization of the economy means that all nations are linked more tightly than in the past. The current economic situation is a reminder of this reality. To maintain the global recovery, the consuming countries—the United States and much of Europe—will need to consume less and the producing countries—China and other growing econ-omies—will need to consume more, according to most economists.

The United States has not had to decide how to allocate resources for more than 60 years because its economy was the fastest and most consistently growing one in the world. Today, however, it faces tough decisions about how it will invest societal resources over the next five to 10 years. With health care being among the fastest-growing components of government spending in the face of huge state and federal government deficit spending, is it any wonder that it is under the microscope as an opportunity for change?

Second, a growing percentage of the population is older than 65 and moving into retirement while there are fewer people younger than 65 who are contributing productively to the economy. Those older than 65 tend to consume and spend more conservatively and require more health care coverage. Fortunately, the United States has a diverse population, so while its elderly population is growing, it is not growing as quickly as that of European nations.

Compounding the demographic challenge is our physician-centric delivery model. In the United States, primary care physicians comprise one-third of our physician population compared with 70 percent in the United Kingdom and 50 percent in Canada. Additionally, 21 percent of all practicing physicians (all specialties) are age 55 to 64, and 16 percent are older than 65. In essence, 37 percent of all practicing physicians likely will leave the active workforce over the next decade. Our capacity to deliver services clearly will be challenged.

In addition, reform adds 30 million people to the eligible pool of insured individuals. At the same time, our delivery capacity is being depleted. In short, we do not have enough traditional providers to deliver care.

Finally, about 25 percent of the entire physician workforce is international medical graduates trained at medical schools throughout the world. Because developing economies are growing at such a rapid clip, the desire by these physicians to immigrate to the United States is lessening.

Thanks to the Internet, health care has changed from an information theocracy, where only the physician has access to medical information, to an information democracy, where patients can access a wealth of medical information on their own. Health care consumers expect greater transparency than ever before, and our system no longer can hide behind the shroud of the guild or the professions.

Health care is at an inflection point. As leaders, we need to recognize the forces that are changing our industry forever and embrace that change. Physicians and hospital leaders must define a new direction in health care delivery. We are not prescient, but as providers of health care we have an important perspective on how to make the system better. I think we can and should offer the alternatives.

The Big Picture

Health care leaders must embrace seven realities to be successful in navigating the maze that lies before us over the next five years.

Culture. Hospital and clinic cultures must converge. We no longer can afford a system that allows us to operate in silos. Rather, we need to embrace a common philosophy of outcomes and quality as the hallmarks of success—not number of procedures and percentage of market share. These latter metrics will be the result of rather than the driver of care in the future.

Governance. A unified decision-making model must be developed for health care. In the near future, it will not be acceptable to invest in infrastructure without considering noninfrastructure options. For example, is it better to build more emergency departments or invest in technology that keeps patients at home with better outcomes and safer results? Only a combined governance model that brings together providers and stakeholders will facilitate this type of decision-making.

Operational integration. Operating as independent entities without a total overview of how resources are being allocated within health care will be the demise of many health care organizations. The integration of financial, clinical and operational systems is a crucial consideration for future success. For example, while the effort to deploy clinical information systems is critical for supporting added productivity, we also need to tie in operational and financial systems to support efficiency and effectiveness. A unified infrastructure of information and management will foster both the internal and external transparency required to engage in accountable care delivery.

Operational focus. A focus on pure operations without considering care management and quality outcomes will not work in the future. The move toward accountable care requires that all participants in care delivery (physicians, nurses, labs, pharmacies and home care, among many others) be equally knowledgeable, incentivized and focused on the results of the "product" (an uncommon word in health care) we are producing. In today's world, each silo does what is best for itself. We need to recognize that working across all levels of the care delivery process will lead to better results and safer outcomes for those who entrust their care to us and more success for our organizations.

Clinical leadership. A deep understanding of how the products and services are delivered must be a core competency for organizational leadership. Attempting to create accountable care organizations without having engaged physicians, nurses and other delivery partners is akin to owning and operating an airline without engaged pilots.

Incentives management. I frequently tell my health care colleagues that the American system is performing exactly as the incentives tell it to perform. To modify the system, governing boards, hospitals and physicians need to come together to develop common incentives for managing distribution of resources.

The reform package moved us in the right direction, although there is more to do to create a level playing field. Governing boards that reflect the constituencies involved in providing accountable care will be able to manage the new incentives of the system more effectively.

Investments. Finally, governing boards that include physicians, hospitals and other direct care providers along with community representatives must make joint decisions on investments in infrastructure, technology, services capability and the entire plethora of capabilities we define as health care. These investment decisions cannot be made in isolation. If they are, the investments will be wasted over time. This issue circles back to culture. It is important for leaders to work together sooner.

Hospitals, physicians, nurses, retail pharmacists and other stakeholders must collaborate to help us all respond to the challenges facing health care, thus benefiting society as a whole. I firmly believe that the solutions to our problems are evident in the field. The experiences and laboratories of democracy are ripe with solutions. We need to pluck them from the field, invest in them wholeheartedly and move forward.

Kevin Fickenscher, M.D. (, is chief strategy and development officer for Dell Healthcare Services, Washington, D.C.