5 Ways You Can Foster Innovation In Your Health System: Takeaways from Our Conversation with Dr. John Kenagy

We recently had the opportunity to interview Dr. John Kenagy, a surgeon and health care executive, author of “Designed to Adapt: Leading Healthcare in Challenging Times,” and, according to Forbes, “The Man Who Would Save Healthcare.” Based on our conversation we outline five key insights on how leaders can foster innovation.

  1. Simplify Success

  2. Implement an Innovation Framework

  3. Recognize Burnout

  4. Leverage Neurophysiology

  5. Be Clear in Your Understanding of AI

Listen to the episode here.

Simplify Success

In 1998, Dr. Kenagy found himself frustrated by the way health systems operate, and so chose to go on a “self-imposed sabbatical” in Boston. The trip led him to Clayton Christensen, who at the time was developing a concept called disruptive innovation. He was asked to join the research team as a visiting scholar, which allowed him to observe firsthand top corporate organizations who were successfully innovating. 

The insights he gathered from companies like Toyota and Apple translate well into health systems. He shares that great innovators simplify success through clear-minded leadership, distinct intent, and market-focused goals – all key factors for favorable results. Healthcare Innovation should be founded on providing a large group of people something that they desire but cannot currently access or afford by reducing the cost of quality care and delivering outwardly focused goals (based on patient needs). Above all else, things should be made simpler.

He quotes Dee Hock, Founder and former CEO of Visa, adding; “Clear purpose and simple rules give rise to complex and intelligent behavior. Complex rules and regulations give rise to simple and stupid behavior.”

An Innovation Framework: Adaptive Design

In addition to simplifying, Dr. Kenagy advocates for the adoption of a framework that guides innovation. He created Adaptive Design to improve clinical outcomes, patient experience, and financial performance while simultaneously improving morale, trust and optimism from within.

At the core of Adaptive Design is a patient-centric Value Proposition: Ideal Patient Care. It is a clear, consistent, meaningful purpose that continually guides the work of innovation from within. Ideal Patient Care is:

  1. Exactly what the patient needs, when and where they need it

  2. Customized individually

  3. Immediate response to problems or changes

  4. Safe physically and emotionally for patients, and safe physically, emotionally, and professionally for caregivers and managers

  5. Without waste of resources

Rather than implement Ideal Patient Care, the Adaptive Design begins by pinpointing a specific unit or line of service as a “center of value and excellence” that responds and innovates when the work is not Ideal. Establishing one small place in the organization, simplifies the work and creates a safe space, distinct from the system as a whole, that allows for questioning of the status quo.

The next step is naming a couple of individuals from within the organization as “learner-leader-teachers.” These individuals, alongside a unit manager, begin the process of observing and documenting without taking any action. What they consistently see is that health care providers are spending far too much time ‘working around’ small system failures and not enough time on patient care. For this reason, the third step is to ask staff and caregivers to Identify when they do not have what they need to meet patient care needs ideally. Guided by simple rules, that signals the ‘learner-leader-teachers” to start a real-time improvement experiment designed to move patient care closer to Ideal.

Using this framework, providing a positive patient experience becomes a part of everyone’s daily work. Dr. Kenagy and his colleagues used this methodology in an underperforming nursing unit, resulting in HCAHPS patient experience scores increasing 50-120% in six months. In another hospital nursing unit, staff increased nursing care time 135% by decreasing workarounds 74%, had the most improved Patient Experience in a 17-hospital system and generated a financial benefit of $1.7M in one year. A large, national health system, compared five clinics using Adaptive Design to all the other clinics in the system. They found that the Adaptive Design clinics had performed 123% better than the rest of the system in improving Population Health.

Leverage Neurophysiology in Management

Dr. Kenagy illustrates that while companies develop reputations for being innovative, the driver of their success is primarily their people - and a culture that keeps them innovative. When people say, “that’s a very innovative company,” about corporations like Apple, he suggests that credit is not the company, but the individuals, and those individuals’ brains within in it. Health care leaders that want their companies to be seen as innovative companies, then, must seek to develop and retain that human talent to innovate.

One learning from neurophysiology that leaders should pay attention to is that the human brain is non-consciously hardwired to repeat past successes. When things work well, this mechanism nudges us to act in a way that is likely to result in future successes. However, when success factors change, smart leaders make unsuccessful decisions if they don’t recognize that the game has changed. Organizations that are constantly innovating foster environments in which Leadership sets direction with a meaning purpose and simple operational rules. Then their people have a chance to continually energize self-regulatory neurologic circuits by discovering the status quo is not Ideal, engaging in real-time improvement experiences and succeeding. That builds trust, optimism and a powerful sense of Mastery.

Be Clear in your Understanding of AI

On the role of artificial intelligence in the field, Dr. Kenagy states, “AI is right now, I believe, the Emperor’s New Clothes.” Leaders’ cannot abdicate critical thinking to AI, which is a powerful tool, but still merely a tool.

He predicts that the face of care can be revitalized if AI is developed correctly - not in meeting rooms, but in centers of excellence where it is close to the problems it is being used to solve with people that are able to harness its power. He cites Melanie Mitchell’s op-ed in the New York Times in which she proposes that AI without meaning isn’t functional; only real intelligence makes a difference and will provide value.

The combination of human brains and AI has the power to dramatically improve healthcare if it’s developed, aligned and improved in the complexity of the point-of-care. In anecdotes we see increasingly AI being referred to as a strategy. That is a grave mistake - strategy is strategy; AI is a tool. And leaders without functional understanding of AI are more prone to confuse the two at great expense to their organizations. 

Recognize the Drivers of Burnout

Being both a surgeon and health care executive, Dr. Kenagy is no stranger to witnessing provider burnout. And the major driving force he has noticed? Health care professionals being unable to do the job they signed up for in the first place - taking care of patients.

The sources of burnout may be different for groups. For some, administrative tasks and other constant barriers diminish the value of the work. For others, a sub-optimal patient access system may funnel patients to providers for the wrong reasons at the wrong time. That’s a huge, but hidden, workaround and cost for physicians, staff, patients and the system. And it’s a great problem to solve. Indeed, the statistics are grim: 70% report symptoms of burnout and 400 physicians commit suicide each year.

Enabling staff and physicians to identify problems and respond in real time to eliminate the system failure as part of everyone’s daily work reduces burnout by increasing time spent with patients (not paperwork), while decreasing exhaustion and depersonalization. Burnout is not just an at-work burden, it truly takes a neurophysiological toll that can diminish the capacity of an organization to innovate.


Health systems can learn how to create a culture of innovation from other industries. By simplifying success, implementing a framework for innovation, leveraging neurophysiology, clearly understanding AI, and reducing burnout, providers have an incredible opportunity to transform their organizations and society.