Healthcare offers lessons from the last recession to higher ed of what not to do

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Apr 23, 2020

As policymakers and higher education leaders consider how to serve the millions of adults who will need to upskill in the months ahead to get back in the labor market—one that former West Virginia Gov. Bob Wise said will be “one of the most mass redeployments of a workforce that we’ve ever seen… [perhaps] except for coming out of World War II”—extending Pell Grants and federal financial aid so that they can be used more flexibly will be high on people’s minds.

There will be many opportunities to use stimulus funds to push forward competency-based learning models—in which the federal government pays for mastery of learning, not the number of “credit hours” students accumulate. Competency-based learning designs are, theoretically, a far more robust way to learn, as they ensure all students master the critical learning objectives before graduating. Those learning objectives can also be highly tailored to a variety of needs, including the skillsets and habits of success that employers need in new employees.

That, in turn, could create tremendous opportunities for students to transfer between institutions far more seamlessly and not rack up debt and wasted credits.

But as Washington, D.C. and higher education innovators consider how to move forward, they should bear in mind the last recession and the fervor with which policymakers tackled what they thought would be a transformational moment in an industry with many parallels to higher education: healthcare.

In 2009 in the throes of the Great Recession, Washington, D.C. was gripped by the potential of electronic health records (EHRs) to address problems in the quality of healthcare and the cost of administration, as well as empower patients and make healthcare work better. To usher in this supposed golden era in which patients would have control of their portable medical records that they could share instantly with doctors anywhere in the country to coordinate and strengthen their care, policymakers passed the HITECH Act in February 2009, which took a significant chunk of the stimulus funding for the cause.

In some ways, one could argue that the legislation was successful. As Ben Thompson wrote, “EHR penetration in physician offices went from just over 40% in 2008 to 86% in 2017, and in hospitals from around 10% to 96%.”

But despite this growth, EHRs haven’t led to a better, more affordable system that allows patients to coordinate seamlessly their care across a range of providers of their choice without accumulating hassle and additional costs. A piece in Fortune reveals how 10 years and $36 billion later, the system is an “unholy mess.”

Rather than a golden era of interoperability, EHRs have remained largely stuck behind the walled gardens of individual healthcare systems, unable to communicate across providers not in the same network—and used as a way to strengthen those individual providers’ positions, even as many of the doctors that use them despise them, as they find them unwieldy and unworkable.

In essence, providers leverage EHRs as a mechanism to coordinate care within their system but not outside of it. They serve as an innovation that helps individual providers create lock-in so that it’s harder for patients to leave.

What was so painful about this is that it was all predictable ahead of time, as Richard Price and I write in a new policy white paper for the Clayton Christensen Institute, titled “Creating Seamless Credit Transfer: A parallel higher ed system to support American through and beyond the recession.”

In January 2009, just one month before the HITECH Act passed, Clayton Christensen, Jerome Grossman, and Jason Hwang’s book The Innovator’s Prescription was published. It showed why treating EHRs as a problem of technology and funding was bound to fall short, as it would foster adoption but not systemic transformation. Transforming the system through robust personal health records (PHRs) would require recognizing the interdependence of different business models in the system, as well as the incentives and motivations of the system’s stakeholders.

good theory—a statement of cause and effect bounded by circumstance—as Clay Christensen often reminded people, can be powerful in predicting the future.

The lessons from the EHR moment are ones policymakers and higher education innovators should consider.

In the paper, we recommend that one way to create true competency-based learning opportunities that are rigorous and create system interoperability is to use expanded Pell grants and other government financial aid to prove mastery on industry-valued skills that third-party credentialing bodies assess and validate.

By having a third-party organization validate a student’s learning, this could allow the government to stop paying higher education based on credit hours and instead pay for actual student-learning outcomes that are independently verified and valued by employers.

That could allow the government and students to pay providers, at least in part, based on outcomes because there will be a rigor bar that unscrupulous providers can’t easily exploit.

In K–12 education, New Hampshire’s Virtual Learning Academy Charter School (VLACS) provides a compelling example of how this could work.

In essence, VLACS is paid as students demonstrate mastery of competencies. When a student demonstrates mastery of 10% of a course, it receives 10% of its allocated funding, which is held in escrow. When a student masters the next 10%, the school receives the next 10% of funds.

Such a system would also create seamless transfer for students—a major challenge in which students accrue credits at institutions that don’t count when they transfer to another college—because institutions will no longer be the sole gatekeepers of the learning and credentials students earn.

This would represent a dramatic shift. It’s also not one that I think should apply to the whole higher education system. Instead, the federal government ought to implement a parallel system to today’s dominant higher education system.

And because a move to true competency-based learning — untethered from time — is so dramatic, any moves from regulators seeking to make higher education more robust and responsive to meet learner needs must also prize rigor and reliability.

Michael is a co-founder and distinguished fellow at the Clayton Christensen Institute. He currently works as a principal consultant for Entangled Solutions.