Some departments change purpose without changing their name, their budget line or their reporting structure. The work transforms underneath while the org chart stays put, and for a while nobody notices because the weekly numbers still look familiar.
US healthcare is running the clearest example of this right now, and the mechanics transfer to any business with a function built around a single measure.
The original job
Insurers covering Medicare patients in the US are paid more for covering sicker people. The design is deliberate, because otherwise insurers would avoid anyone expensive to treat. How sick a patient is gets established through diagnosis codes drawn from clinical notes.
That created a department with a clear mandate: review patient records after the fact and find conditions that were real but never recorded. Every find was revenue. The function reported into finance in many organisations, carried a target, and was measured on volume found.
It worked for roughly fifteen years. Tooling got built around it, vendor contracts got priced on volume, and staff spent careers becoming expert at finding things other people had missed.
The job changed. The department did not.
Regulators shifted what they measure. Not how many diagnoses you found, but how many of the ones you submitted hold up when someone reads the record underneath.
The US Office of Inspector General reports that across diagnosis codes it considers high risk, roughly 70 percent were not supported by the associated medical records, with some categories above 90 percent. In one audit of 97 records carrying an acute stroke diagnosis, none were supported as acute strokes. In 68 of those cases the patient genuinely had had a stroke years earlier and the record described it as current.
Nobody fabricated anything. The department did exactly what it had been built and rewarded to do.
Overnight, in function if not in title, it stopped being a revenue centre and became a risk control. Same staff, same tools, same budget line, completely different purpose.
Why this transition is harder than it sounds
Three things make it stick, and they are the same three in any industry.
The tooling only moves one way. Review software was built to surface candidates and rank them by confidence. A ranked list has no entry meaning “remove this.” So the function physically cannot perform its new job with its existing stack, regardless of intent.
The incentives point backwards. Vendor contracts priced on volume found pay for exactly the behaviour that now creates exposure. Renegotiating those is slow and nobody wants to be the person who reduces a number that has been going up for a decade.
And the identity resists. When a measure has defined success for years, it stops being a metric and becomes what the department is for. Telling capable people that what they are best at is now half the job, and the less important half, is a conversation most leaders defer.
What the shift actually looks like in practice
The function does not disappear. It inverts. Done properly, retrospective risk adjustment now works in two directions: it still identifies conditions that were real and never recorded, and it also identifies submitted codes the documentation does not support, so they can be removed before an auditor finds them. Same review, two possible outcomes instead of one.
That is a narrow technical change with a large organisational consequence, because a department that can produce a negative finding needs somewhere to send it, someone accountable for acting on it, and a measure that rewards accuracy rather than volume.
The transferable question
Worth asking about any function in your own business that was built around a single measure.
- Has the thing we are judged on changed while the department kept its original shape?
- Can this function produce a result its leadership does not want to hear, and is there a route for that result?
- Are we still paying suppliers for the behaviour that is now our exposure?
A department whose purpose has inverted while its incentives stayed put is not an underperforming department. It is one being measured against a job it was never configured to do.
