Don't Overlook Opportunities for Structural Transformation

And to design optimal care processes, he adds. But does this painstaking work result in cost reduction? Many CEOs argue that they've seen many benefits from such re-engineering engagements—except cost reduction.

"It's too early in this experience, but I've done this before and have gotten costs down," says the former chief innovation officer at Geisinger Health System, who built his reputation as a leader on such work at Geisinger, which has been modeled around the country.

The key is going in with a cost target. "I've arbitrarily said we've got to get at least 15% of the cost down in every redesign," he says.

There are two ways to get at that cost, he adds. One is in the marginal costs associated with the care of any given patient. If you eliminate a step, that removes some level of cost. But often, you're still stuck with the fixed cost.

To attack the fixed costs, you increase throughput in the same fixed cost structure. For example, Paulus thinks there's room to see 115 patients through the ED where there once was room for only 102.