This is a Revolution (not a Transformation) – Five Key Areas for Disruptive Innovation in Healthcare

If you are like me, when you hear the word innovation you imagine big things … putting a man on the moon … flying cars … low cost renewable energy … even a cure for cancer.  I can hear The Jetsons music playing in my head as I write this.

We are only limited by our imaginations.  I bet you have never considered how postal workers might participate in delivering healthcare?  In fact, you could make the case that postal carriers are contributing some of the most innovative ideas to transforming healthcare.  YES… Postal workers.  NO… I am not kidding.  Keep reading.

We are on the precipice of a new age in healthcare.  Like the industrial revolution that shaped America in the 1800s … the healthcare industry is entering that same type of business revolution.  Are you frenzied by this yet?  You should be.  The most aggressive and innovative organizations will win … and reap the benefits.

Clayton Christensen defined innovation in specific terms when he wrote the The Innovator’s Dilemma in 1997. Christensen’s book suggests that successful organizations put too much emphasis on current needs, and fail to adopt new technology or business models that will meet unstated or future needs. He argues that such organizations will eventually fall behind. Christensen calls the anticipation of future needs “disruptive innovation”. The concept of disruptive innovation is contrasted in the book with smaller, more obvious, incremental or “sustained innovation”.

Look around and count how many healthcare companies are making this exact mistake. Too many organizations are focused on current needs only. Both types of innovation are needed for ongoing growth and a healthy organization (pun intended).

Why is this relevant?  The fact is … healthcare organizations will have to compete, based on the value they deliver, in the not too distant future.  We haven’t seen this type of transformational business opportunity since the industrial revolution days of Cornelius Vanderbilt, Nelson Rockefeller, Henry Ford, Andrew Carnegie and J.P. Morgan.  These men all understood what was happening and then transformed their industries through innovative business techniques and approaches.  Most just watched them do it.  In healthcare, the organizations innovating now will lead this revolution and reap the spoils.  This is a completely different way of thinking about healthcare.  New markets and segments will seem to appear out of thin air.  It will be fueled by innovation … disruptive innovation.

Cleveland Clinic CEO Dr. Delos Cosgrove gets this.  98% of the people that request a same day appointment at the Cleveland Clinic get one, and there were over one million such appointments last year.  Focusing on costs doesn’t have to come at the expense of the patient.  Do you get that level of service from your local provider?  Why not?

Led by Joe Dickinson, postal workers on the small island of Jersey (off the coast of France) get this too. The island of Jersey has the same aging population issues as the rest of the world but the postal workers in Jersey have come up with an incredibly innovative way to extend their role and value through a new “Call & Check” service.  This is easily the coolest thing I’ve seen in quite some time.

By using postal delivery people in a community care model, any citizen can request a “Call & Check” at their home … and the postal delivery person whose has that route will stop at the home of the frail elderly person and do a “call and check”.  Here is a person who’s job it is to visit every house everyday any way, why not leverage that?

In other words, a friendly face comes by when needed to help, provide company or just look in.  The check can be — do you have the medications you need, is there a rug you could trip over, can you reach the top shelf without failing. Is there a nick in the skin of the lower extremity, can someone take you to see the doctor for your appointment scheduled this week. These “call and checks” are many of the things that make it possible for us to keep seniors in their homes longer.  It’s well-documented that “in-home” senior care is the optimal model and this type of service seems like a sensible and needed component.

Check out the video on how the “Call & Check” service works.

I am a big fan of Dr. Atul Gawande. In 2009, he published the breakthrough book: The Checklist Manifesto: How to Get Things Right. This book was a bestseller and lauded as an effective way to innovate and improve things.  Since then, Dr. Gawande has gone on to write several other books and is clearly an expert in his field.

However, at the time I read his book I did not have the same reaction as the rest of the industry. I was actually quite shocked that key healthcare processes like pre- and post-surgical processes weren’t already rigorously managed by checklists (or other proven methods) to ensure that surgical sponges, or instruments, weren’t going to be forgotten about and left in patients.  After all, there are published references to the use of checklists dating back to the 1800s and quite possibly earlier than that.  Quality approaches to processes (such as ISO 9001, Six Sigma, etc.) have existed for decades.  It’s a sad state of affairs, that nearly two centuries later, the adoption of checklists in healthcare is seen as innovative.  Maybe this isn’t a fair example, but it’s hard to see the industry as being innovative when so many people got that excited over checklists.

Score one for the postal workers!

The reality is that those who invest in and embrace technology today will be the leaders of tomorrow.  Many physicians are embracing new technologies like IBM Watson Oncology Advisor … but sadly, some are still resisting using checklists.

When you look around the healthcare industry today, there is not enough disruptive innovation. There are examples of sustained innovation but very little is going on that would qualify as disruptive.  Most of the efforts that get labeled as innovative in healthcare are in support of the “triple aim”.

If you are not familiar with this term, the IHI Triple Aim is a framework developed by the Institute for Healthcare Improvement that describes an approach to optimizing health system performance (simultaneously) in three dimensions:

  • Improving the patient experience of care (including quality and satisfaction).
  • Improving the health of populations.
  • Reducing the per capita cost of healthcare.

The IHI website highlights that The US healthcare system is the most costly in the world, accounting for 17% of the gross domestic product with estimates that percentage will grow to nearly 20% by 2020.  At the same time, countries with health systems that out-perform the US are also under pressure to derive greater value for the resources devoted to their health care systems.  Aging populations and increased longevity, coupled with chronic health problems, have become a global challenge, putting new demands on medical and social services.  Only technology-enabled innovation can enable this fundamental and simultaneous degree of change.

Of course, there are numerous barriers making this incredibly difficult to achieve … not the least of which is the continued widespread use of fee-for-service-based payment models.   This is a core business model, process and foundational problem. The wrong incentives cause the wrong behavior and actions that lead to poor (and costly) outcomes.

The Center for Medicare & Medicaid Innovation (The Innovation Center) is helping by supporting the development and testing of innovative health care payment and service delivery models. These are important incremental steps, to transforming the industry … but we have to go faster in five key innovation areas.  The current rate of innovation is being measured with calendars when it should be measured with a stopwatch.

  • Business and payment model innovation such as shared risk, capitation, bundled payments, self insuring and more is starting to happen but taking too long.  Every payer and provider should have multiple experiments going in these areas now.  Acquiring this experience now is essential so that when the big money is at stake you’re not starting from scratch.  Continued industry consolidation will eventually help enable new forms of business model innovation but only after these acquisitions get integrated and are made to work functionally.  Too much consolidation could actually slow down business model innovation.  Net-net … We need to be much more aggressive in moving away from fee-for-service. Ultimately, it will be innovative technology solutions like practice management analytics and care (case) management that factor in process level care delivery costs that enable this to happen.
  • Business process innovation is not getting very much attention anywhere in healthcare.  When Lou Gerstner turned around IBM in the 1990s, one of his top initiatives was to blow-up and re-engineer the core business processes.  Hanging onto the fee-for-service business model is a slow lethal poison.  It’s toxic.  A fee-for-service business culture breeds ignorance of how to control costs effectively (and still deliver quality care).  In other industries, key organizational processes are measured by using techniques like time and motion studies to understand costs at a very granular level.  Not in healthcare.  Many core processes aren’t well understood at all.  This disables any chance to innovate through processes, which can reduce operating costs significantly.
  • Care delivery model innovation is also taking far too long to reach the mainstream.  Community care models and telehealth are examples of things that should be much farther along then they are.  The notable exception to this is the adoption of Patient Centered Medical Home as driven by organizations like the Patient-Centered Primary Care Collaborative.  Every payer and provider should have a population health management solution deployed today.  The ability to organize and manage based on population health … and to use that information to personalize care delivery is a major enabling piece of innovation.  The value of these solutions are well proven and anyone who is not using one of these is already well behind.  Phytel even offers a guaranteed Return on Investment of at least 3x.  That’s pretty innovative all by itself.  What have you got to lose?
  • Organization innovation is laughable.  The United States is the only major economy where healthcare and social programs are two separate things.  The connection between the social determinants of health and delivering good patient outcomes is undeniable … yet politics, system silos, and other overcome-able obstacles prevent our caregivers from using this critical information to deliver low cost care and better outcomes.  By some estimates, over 60% of the best healthcare outcomes are derived by using social determinants.  What are you doing to integrate social determinates into your systems, processes and decision making?
  • New technological innovation is perhaps the most obvious way to think about innovation.  If you have not already invested in cognitive computing, analytics, mobile, cloud, population health and care management solutions then you are in the stone ages and well behind … because your competition has.  George Jetson didn’t have Watson at Spacely Sprokets, but he did have R.U.D.I. (Referential Universal Differential Indexer). R.U.D.I. was George’s work computer and one of his best friends (next to his dog, Astro).

This is a revolution .. not an evolution !! 

Vanderbilt, Rockefeller, Ford, Carnegie and Morgan didn’t wait for the next round of incentives .. they SEIZED on their opportunities .. you should too.  It will be the pioneers of today who are the winners in tomorrow’s competitive healthcare industry

Spacely Sprockets may have had R.U.D.I. but we (at IBM) are taking disruptive innovation seriously with our growing family of Watson Healthcare solutions, innovation in population health analytics, IBM Smarter Care solutions (including care management) and new joint mobile healthcare solutions from our strategic alliance with Apple.

NOW is when is the disruptive innovation needs to happen … what will yours be?

I will be at HIMSS in Chicago on April 12-16th. (IBM Booth 1425).  Stop by and say hello.