The 49th State

Alaska holds a special place in the American imagination, but for most of us details about the history of our 49th state are a bit fuzzy, so here is a very short review. Alaska joined the US in 1867 when William Seward, Secretary of State under President Andrew Johnson, bought the territory from Russia for $7.2 million and became famous for having committed "Seward's Folly". The day that the Russian flag came down and the US flag was raised at Fort Sitka - October 18, 1867 - is now commemorated as Alaska Day. Amazingly, Alaska did not go on to become a US state until over 91 years later, on January 3, 1959.

Today, Alaska is the largest US state by land area, totaling over 570,000 square miles, or more than Texas, California, and Montana combined. It is also the 3rd least populous, with 740,000 residents, half of whom live in the Anchorage area. Importantly, Alaska Native peoples have lived in Alaska for thousands of years and may have been the first humans to arrive in North America. According to the Alaska Federation of Natives, eleven distinct native cultures - Eyak, Tlingit, Haida, Tsimshian, Inupiaq, St Lawrence Yupik, Yup'ik, Cup'ik, Athabasacan, Alutiiq, and Unangax - comprise 18% of the state population or approximately 133,000 people. This mix of urban and rural populations with multiple distinct cultures spread over huge distances creates a challenge for any healthcare delivery system.

ANCSA and SCF

The story of the creation of the Southcentral Foundation (SCF) is helpful for understanding the context in which the organization operates. Following the establishment of Alaskan statehood in 1959, attention turned to the issue of oil and other natural resources, and to the rights of Alaska native peoples to their lands and the resources on and under them. The end result of more than a decade of debate and litigation was the Alaska Native Claims Settlement Act (ANCSA), signed into law by President Nixon in 1971.

In contrast to the reservation systems typical of US relations with indigenous peoples in the lower 48, ANCSA created a for-profit corporate model. The Act extinguished all land claims by Alaska Native peoples in exchange for a one-time monetary settlement and the transfer of about 10% of Alaska's land area to over 200 newly created Alaska Native-owned village and regional economic development corporations.

All Alaska Native citizens living at the time could enroll in one of these corporations and receive shares of stock in their village or regional business. The corporations were then able to develop their own natural resources as shareholders saw fit, and to use the revenues to provide services, eventually including healthcare, as well as distributions to their shareholders. Though not without controversy for its effect on indigenous cultures and communities, the ANCSA did lead to a degree of economic self-determination for Alaska Native peoples that was not available to many other Native American groups.

The Cook Inlet Region, Inc (CIRI), show in gray on the map, was one of the regional Native corporations established by ANCSA and includes Anchorage and surrounding rural areas. In 1982, CIRI created the Southcentral Foundation (SCF) as a nonprofit organization to help provide healthcare services for the Native peoples of the south-central region of Alaska. At the time, the federal Indian Health Service (IHS) was the primary healthcare provider for Alaska Native people in the region, but that system suffered from long wait times, poor outcomes, and low patient and employee satisfaction. SCF initially began its work to improve on those results with dental and optometry services but had begun to expand into primary care medical services by the time that Doug Eby arrived in the late 1990s.

Shortly thereafter, another decade of advocating and lobbying for better services finally bore fruit in the form of a federal law allowing a shift from federal control of Alaska Native healthcare under the IHS to local control. The assets of the newly built Alaska Native Medical Center (ANMC) were transferred from federal to tribal control, and the current joint operating model described by Dr. Eby in the podcast was established.

Importantly, this arrangement allowed continued funding for SCF from the Indian Health Service, and today about one third of SCF's revenue comes from IHS, in the form of what is essentially a block grant. As described in the video, other revenue sources include Medicaid (using an unusual global cost-based payment model based on the prior year's costs), and HRSA support for operating 14 community health centers for the uninsured and medically vulnerable.

Healthcare delivery, like most systems in which human beings are key participants, is a complex adaptive system. But the characteristics of a complex adaptive system mean that behavior tends to emerge from the system rather than being easily dictated to it by external controls. As a result of this characteristic, the behavior of such complex adaptive systems can be very difficult to predict and control. In addition, increasingly detailed and complicated sets of instructions and protocols are generally ineffective in a complex adaptive system. A better choice is to use simple instruction sets or frameworks that set boundary and directional goals for the system. For a fascinating discussion of applying these ideas to the subject of value-based healthcare, take a look at this 2023 piece from Stefan Larsson in NEJM Catalyst.

As discussed above, the Toyota production system is an example of "scientific management" (more about this in Episode 4), an approach based on the idea that complicated systems can be made highly reliable and efficient with sufficiently stringent and complicated control systems. If what we have just said about complex adaptive systems and healthcare is true, then why has the Toyota production system been so widely used and successful? An answer is summed up in the Stacey diagram, to which Doug Eby refers in the podcast.

This idea, first put forward by organizational theorist Ralph Stacey in the late 1990's, is that situations faced by an organization can be charted on two axes. One axis shows how much agreement team members have about what to do. The other axis shows how much certainty team members have about what will happen in response to their actions. In the lower left quadrant, where there is high agreement on what to do and high certainty about how well it will work, a Toyota style management approach works well. Elective surgeries are the usual example given for this situation. The best operating rooms run like the best assembly lines - consistently, reliably, efficiently.

Unfortunately, much of healthcare occurs away from the lower left quadrant of the Stacey diagram, out in the zones of complexity and chaos, where agreement on what to do and certainty about what will happen are often very limited. These are the places where complex adaptive system theory can be a very useful framework.

One additional and related approach to complexity theory that may be of interest to our readers is the Cynefin framework. This set of ideas - similar to the Stacey diagram - categorizes situations as simple, complicated, complex, or chaotic. The framework offers guidance on identifying common problems and pitfalls in each type of situation and on designing effective situation-specific leadership responses. For example, simple contexts require application of known best practices but create a risk of entrained thinking and complacency. In contrast, complex contexts have no right answer and respond best to increased communication and openness to innovation, but leaders need to be patient enough for solutions to emerge and not fall back into command and control practices.

Hopefully these ideas and frameworks provide useful background and context for podcast viewers, and will spur reflection about how these ideas and Eby and Tetpon's success with Nuka could be incorporated into your own thinking and practice.

See you next week -