Everything old is new again

Reading this story about heading off expensive litigation by just saying you’re sorry, I had a flashback to a meeting twenty-five-odd years ago from which I learned important management lessons. For really mysterious reasons, I had been appointed to a state commission to deal with what then felt like a malpractice insurance crisis, and called Charles A. Sanders, then general director of Mass General, to try to get some free ignorance reduction therapy. Sanders is a very smart and reflective guy with whom I had worked on an international consulting project. We met in his office and he introduced a kid even younger than I, who turned out to be the hospital’s in-house lawyer. This seemed a little paranoid on Sanders’ part: “Gee, Charlie, you didn’t have to bring your lawyer, I just want to listen!”

I don’t remember the counsel’s name, call him Fred; “No, I invited Fred because you need to hear his story.” (Only later, as I got into the issue, did I realize that Sanders’ behavior was against type: the docs I interviewed and who testified to us were almost entirely, and radiantly, of the view that they completely understood the situation, that lawyers were the problem, and neither they nor economists had anything of value to offer. Did I mention that Sanders is a very smart guy?) The story was that soon after Fred arrived, he was assigned to get on top of malpractice claims, and he sat down with six months’ worth of files. All of them, he discovered, began with a collection action for non-payment of a bill. So he ordered the accounting office to send him every overdue account before any efforts at collection, and invited the deadbeat patient into his office for a conversation. Invariably, the patient was withholding payment because he thought he had been mistreated. Often, the patient was right. The next meeting was with the practitioner accused of having screwed up, and the outcome was sometimes an apology and a promise to fix the problem for free (for example, another operation at no charge to retrieve the forgotten sponge), sometimes an expression of regret for a bad outcome with an explanation that the hospital hadn’t actually erred: not everything in medicine works every time. Of course this required that Sanders and Fred drive out fear, so the staffers could be honest and sympathetic.

The result of this was a really spectacular reduction in malpractice costs, even counting in the “warranty service” repairs; I don’t remember the numbers but it was on the order of more than half, partly in fees to defense lawyers, partly in claim payments. Frequently the bill even got paid. The reduction in lawsuits occurred both when the hospital was wrong and said so, and when it was right and said so; it turned out a lot of the injured patients just wanted to tell a live person what had happened to them and get an apology. Of course the public relations benefits are enormous, if hard to measure. And quality always goes up when your own people aren’t afraid to talk to each other about instructive mistakes.

It’s notable that Fred’s pay didn’t depend on how many cases he litigated. I don’t think every lawyer advises clients to never apologize just to keep the meter running, but incentives matter. Litigators like to have fights so they can win fights – they didn’t go into the business by chance; I’ve played poker with them and there’s a personality type – and their version of the “why-you-can’t-do” lawyer (in sharp distinction to the “how-to-do” lawyer) is to be really good at thinking of things opposing counsel could seize as a jiu-jitsu opening if they wanted to, and not so good at thinking that these cases are really about people feeling ill-used or mistreated, and that not all games are zero-sum.

Management lessons: as Casey Stengel and Yogi Berra said in unison, “a fella can see a lot by just looking” at least to pick out patterns that suggest experiments. A fella can also learn a lot by actually doing the experiments, even though experts will probably have six reasons why they are terribly risky and doomed to fail. [Most are; so what? Learning is picking the odd pearl from a pile of gravel.] Finally, treating people right, especially owning up right away when you’re wrong, is not on the whole, a sucker’s play for which a hostile world will punish you.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.