A framework for strategic policy, or why the lack of social capital threatens Oregon Medicaid

Strategic framework for influencing policy

If we were to build a strategic framework for policy making, there are 3 areas to consider. There are things you can control, there are things you can’t control, and there are things you can hope to influence. Among the things that you can hope to influence, some of those things you will fail to influence. Some of the things you will influence, some you will influence positively in terms of your interests and some you will influence negatively.

Let me use one of my white boards to illustrate.

Over time, generally speaking the things you can influence narrow. Generally speaking the things you cannot control also change.  That area increases because decisions have been made that are no longer available for reconsideration. Also, other players have become much more active in the marketplace ideas and they’ve solidified their own positions.

To be able to influence policy, whether that’s a statute, a bill, or a regulation, or a procurement, it takes resources and there are three kinds of resources that are at play here. There are financial resources, like money. I think you could put time in that as well since financial resources allow for the acquisition of more labor or time.

Human capital is important, meaning how well do you understand the challenge? Are you educated on the issue well enough? Do you have the right people at the table to positively influence a decision? Time’s also a factor here because even if you have the right people they may not have enough time to develop their own human capital enough to be a positive resource.

And then there’s social capital, the trust and the relationships that have been built over time.  Time is definitely a function here just as it is in the other two.  Whereas in financial capital you might be able to buy more time from smart people, and arguably in human capital you can compress the amount of time needed in order to learn something, in social capital you cannot control the function of time to your benefit.

Just because you want to build social capital and you want to build relationships and you want to build trust does not mean that there will be a partner on the end of that. So this is the key variable in determining in how effective you can influence things and how large your span of control is.


Relating to Oregon’s Medicaid transformation

The Oregon CCO procurement’s coming up in 2018.

If we examine the list of assets required to have a high-quality, well-accepted, politically acceptable, functionally efficient Medicaid system in Oregon, the three assets are again, financial capital, human capital, and social capital. And then time overlays all three of those.

On financial capital, does the Oregon Medicaid system have enough money?  Well that depends, right? Is there enough money in health care? I think most people would say at a system level that yes, there is enough money in health care. It may be that there’s enough money in Oregon Medicaid, but some might argue it is misallocated.


Is there enough human capital in health care? Are there enough smart people in health care? Well, I think it’s pretty clear health care has smart people in it. Whether you’re an administrator or clinician, you’ve gone through a lot of education.  These are extraordinarily well-trained, generally speaking, and very smart people.

That’s not to say health care leaders are perfect.  Specialization sometimes allows us to miss the forest for the trees.  But, all in all, human capital formation has been a success in this workforce.

So social capital. Is there enough trust, are there enough relationships, is there enough history over time with all the players? Well, that’s not clear.

If you look across a range of organizations in Oregon health care, many of those organizations have or will have new executive leaders since the 2012 CCO process.  Providence, CareOregon, Oregon Health Authority, Kaiser, St. Charles, Regence, and PeaceHealth all have or will have a significant level of new executive leadership.

I should note that I think executive turnover can be a sign of a healthy company.  I’m not suggesting that this turnover is bad in any way.  I’m suggesting that new faces risk having fewer relationships in place than existing ones.

Other organizations have left the market, like Lifewise, Oregon Co-Op, and Health Republic, taking those institutional relationships – and sometimes personal relationships – with them.

PacificSource and Legacy is a notable example of organizations coming together to create a new collaboration.

Generally speaking, I think we are in a state of relatively modest social capital aggregation in Oregon Medicaid as a result.  If we go back to our policy framework, it turns out the remaining levers are fewer perhaps than they otherwise could be. The levers continue to be financial and human capital, with a limited opportunity to leverage existing social capital.


Comparing social capital in 2012 with 2017 in Oregon Medicaid

If we go back to look at the gubernatorial term of Governor Kulongoski, he helped foster social capital by holding regular meetings amongst the health care  community, particularly the Medicaid community. Those continued under Governor Kitzhaber.

And it was that social capital that I think Oregon health care executives could then look to and say “This is the reason why we were able to turn around the CCO model so quickly.” To go from legislative passage to an RFP being released to standing up the initial CCOs all in about 7 months, that was a Herculean task.

Yet, that social capital is as important to transformation than the financial capital – and perhaps even moreso.


Returning to the strategic policy framework

Without social capital, our ability to influence policy is narrowed to either money (financial capital) or smarts (human capital). If stakeholders’ ability to influence a CCO procurement, or ultimately Oregon Medicaid in general, is limited, then those stakeholders won’t develop the same level of ownership in the final product as existed in 2012.

Without that level of ownership in the soon-to-be-procured system, stakeholders may resort to other means, all of which are perfectly appropriate and within the span of influence but which are not necessarily constructive. They don’t fall into the band of influence that is positive and constructive. They fall in the band of influence that is negative, the things that can halt policy.

This might be filing for injunction in the courts or leading a campaign against an incumbent policy maker in the 2018 election, including potentially the governor. All those things can sidetrack a policy model, a policy framework that has not adequately sought or allowed for influence and input from stakeholders.



Now, it’s the responsibility of everybody to make the time and invest the resources to build relationships, trust and functioning partnerships.  If you don’t do that, and then you lose policy (or market) battles, arguably part of that defeat is your own fault.

But what I think that means for policy makers who are trying to craft the next procurement and ultimately the next Oregon Medicaid system, is it means they have to spend even more time gathering input, building a sense of stakeholder ownership.

They have to spend even greater time pulling people together in the same way that Governor Kulongoski started going back to 2007 before the 2012 CCO legislation passed. This OHA needs to start spending time fostering social capital in a thoughtful, constructive way, arguably to a degree even greater than administrations which have preceded it.

My point is that Oregon Medicaid stakeholders need to make a major effort to build the trust, the relationships and the level of ownership in the next Medicaid procurement model.

If they don’t, it’s possible that the 2018 procurement model will be beset by lawsuits, or could lead to an overly activist political backlash.

This backlash would come from stakeholders that feel they are under threat, something arguably avoidable through intensive listening, influencing, and stakeholdering.

The consequence of the backlash could fracture the bipartisan nature of Oregon Medicaid that stakeholders take such great pride in having built over the course of a generation of policy makers.