---
description: Larsson and the WEF framework identifies healthcare as a complex adaptive system where four simple rules -- shared purpose around patient value outcomes measurement aligned incentives and enabling governance -- outperform the compliance-driven management that currently dominates
type: claim
domain: health
created: 2026-02-17
source: "Larsson, Clawson, Howard, NEJM Catalyst 2022 (DOI 10.1056/CAT.22.0332); Morieux and Tollman, Six Simple Rules, HBR Press 2014; Plsek in IOM Crossing the Quality Chasm 2001"
confidence: likely
---

# healthcare is a complex adaptive system requiring simple enabling rules not complicated management because standardized processes erode the clinical autonomy needed for value creation

Larsson, Clawson, and Howard argue that healthcare has become "a classic example of what system scientists term a complex adaptive system" -- and that the standard organizational response (standardized processes, KPIs, guidelines, compliance requirements) is precisely wrong. The compliance approach erodes clinician autonomy while adding layers of organizational complication on top of necessarily complex tasks. The result: unnecessary complicatedness layered on genuine complexity.

The complex adaptive systems literature suggests four types of "simple rules" that enable value-creating emergence: (1) a clearly articulated shared purpose around which stakeholders align, (2) access to relevant data and information, (3) resources and incentives aligned with that purpose, and (4) governance mechanisms that encourage autonomy and innovation while protecting against abuse. In value-based healthcare, the shared purpose is patient value -- the best possible health outcomes for the money spent. Patient value becomes what evolutionary biologists call the "selection principle" against which all institutions and reform efforts are assessed.

This framework directly echoes the designed emergence pattern. Since [[designing coordination rules is categorically different from designing coordination outcomes as nine intellectual traditions independently confirm]], the VBC transformation is not about prescribing how care should be delivered but about creating conditions where value-creating care emerges. The four enablers (delivery organization, payments, informatics, benchmarking) provide the enabling constraints; the outcomes emerge from clinician behavior within those constraints.

The NEJM Catalyst paper proposes a government-led "moonshot" with three pillars: institutionalizing outcomes measurement as national health data infrastructure (comparable to financial disclosures for public companies), aligning payment with outcomes improvement, and investing in 21st-century digital health infrastructure including interoperability standards comparable to TCP/IP for the internet. This is explicitly a coordination infrastructure argument -- the same pattern as LivingIP's thesis applied to healthcare.

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Relevant Notes:
- [[designing coordination rules is categorically different from designing coordination outcomes as nine intellectual traditions independently confirm]] -- the same principle applied to healthcare: design the rules, let outcomes emerge
- [[Ostrom proved communities self-govern shared resources when eight design principles are met without requiring state control or privatization]] -- Ostrom's principles map onto the VBC enablers: clear boundaries, collective choice, monitoring, sanctions
- [[enabling constraints create possibility spaces for emergence while governing constraints dictate specific outcomes]] -- VBC requires enabling constraints (outcome metrics, aligned incentives) not governing constraints (standardized protocols)
- [[Hayek argued that designed rules of just conduct enable spontaneous order of greater complexity than deliberate arrangement could achieve]] -- healthcare's complexity exceeds any central planner's capacity, requiring Hayekian spontaneous order within designed rules
- [[value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk]] -- the current state of the VBC transition this framework aims to accelerate

- space settlement governance must be designed before settlements exist because retroactive governance of autonomous communities is historically impossible -- both healthcare and space governance must provide enabling constraints not prescriptive rules, and both face the challenge of designing governance before the system fully exists
- chain-link systems get stuck at low-effectiveness equilibria because improving any single link produces no visible gain until all links improve -- healthcare delivery as a chain-link system where piecemeal improvement at individual links fails
- excellence in chain-link systems creates durable competitive advantage because a competitor must match every link simultaneously -- the flip side: healthcare organizations that achieve chain-link excellence create nearly unreplicable advantages

- diagnosis is the most undervalued element of strategy because naming the challenge correctly simplifies overwhelming complexity into a problem that can be addressed -- the CAS diagnosis of healthcare IS a Rumelt-style re-diagnosis: most reform treats healthcare as a complicated system requiring better management; the CAS diagnosis reframes it as a complex system requiring enabling rules, which transforms the entire strategy
- the resource-design tradeoff means organizations with fewer resources must compensate with tighter strategic coherence -- value-based care organizations that achieve tighter coherence between measurement, incentives, and governance outperform better-resourced fee-for-service systems with looser strategic coordination

Topics:
- health and wellness
- emergence and complexity
- coordination mechanisms
