Recently I had the opportunity to attend an annual innovation event for about seventy healthcare leaders, entrepreneurs, policy experts, and innovators from around the country. My expectation was that there would be some discussion of trends, new ideas and the environment. I was surprised by what I heard and the discussion in which I found myself participating.
I had hoped that there might be information that would add substance to my hope for a better future through innovation. The agenda was my first surprise. Over two days five topics were covered in depth by “panels”. Each panel member made a presentation and then the panel and the group had a vigorous conversation that explored the material in depth while everyone add their insights and experience. It was my kind of meeting.
The list of topics reveals much about the current status of the evolution of care delivery and the discussions connected these timely topics to the mysteries and frustrations of what we call innovation.
- Disruptive Approaches to Population Health Management
- Total Cost of Care(“TCOC”) Contracting
- Measuring and Delivering Value
- Developing and Managing Care Bundles
- Population Health Management Infrastructure
My sense of what innovation is has evolved over the past few years. I think about “innovation” as new products or changes in offerings that surprise and delight consumers. Sometimes the consumer is the patient, sometimes the consumer is the clinician or manager, and sometimes the consumer is the system. Innovations are not necessarily inventions. More often than not they arise as ideas that reassemble what is already existing into a new presentation or a new application.
“Improvements” are often confused with innovations but are not the same. Improvements occur within an established function or device and improve performance or add new efficiencies. The perfect example is the original iPhone. The first iPhone was an innovation that was mostly assembled from things that previously existed. That device innovatively brought the iPod, cell phones and the Internet together in one product. All the subsequent iPhones and competitor smartphones are improvements and not innovations.
As consumers we think of innovations positively, but they are resisted by the status quo because they are at the core of the reality of capitalism that is called creative destruction. Every innovation dooms to irrelevance the product or process that preceded it. If you own the status quo, an innovation devalues and ultimately destroys the value that you own and control. Think about the future of the standard office practice in the era of the rise of the on demand primary care availability in pharmacies, in urgent care centers, and on the Internet. Even the venerable concept of the hospital is vulnerable in a variety of ways to the forces of creative destruction through programs of ambulatory surgery and the evolution of programs to provide better care in the home.
If you clicked on the link above you would have read:
Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. It was coined by Joseph Schumpeter (1942), who considered it ‘the essential fact about capitalism’. The process of Schumpeterian creative destruction (restructuring) permeates major aspects of macroeconomic performance, not only long-run growth but also economic fluctuations, structural adjustment and the functioning of factor markets. At the microeconomic level, restructuring is characterized by countless decisions to create and destroy production arrangements. These decisions are often complex, involving multiple parties as well as strategic and technological considerations. The efficiency of those decisions not only depends on managerial talent but also hinges on the existence of sound institutions that provide a proper transactional framework.
The essence of the resistance to innovation from the status quo is characterized by the two sentences which I have bolded.
Adam Ward is an engineer at Simpler who has a long history in product development and innovation in industry. I asked Adam for his definitions of innovation and improvement. I was surprised when he introduced the concept of creative destruction as a part of innovation and then described the unavoidable destruction of the product or process that is replaced by the innovation. Notice his words that I have bolded.
I dislike the term “innovation” for what I do but it’s the word Simpler has chosen. As a definition, I refer to this “Innovation” as idea-to-launch for future products and services that are not currently offered. There is some feature of the new offering that obsoletes the old one. Innovation gets in trouble when it imagines a solution without understanding the market or customer.
Improvement is removing all waste from the current operational process from order to fulfillment. It is focused on the repetitious task of creating one product/service unit after another with zero variation and minimal waste. It relies on an existing design to have already been created. Improvement can only go so far in controlling costs and customer demand as its levers add no additional value proposition beyond some cost control and increasing supply potential. Once a competitor has disrupted the service/product, no amount of improvement will gain back the lost market share or customer base. Improvement gets in trouble when it tries to appliance principles outside of its expertise area.
When you think of innovation in healthcare you probably were not thinking about it the way Adam Ward thinks about it, and the list of subjects on the agenda of the conference may seem confusing. If you had been there with me and were able to listen to the panels and participate in the discussion, you might have been surprised to learn that the list of the greatest barriers to innovation does not include difficulty in the generation or development of new ideas. Beyond the resistance that is inherent between the status quo and the forces of creative destruction that exist in all industries there are other barriers for the innovator to vault in healthcare.
One well known innovator and entrepreneur in healthcare is Jonathan Bush. He the founder and CEO of cloud based Athenahealth. Bush is noted for his aggressive business style and flamboyance in his attempt to foster change by challenging the standard EHR. During the conference I heard one approximate quote from him that thematically emphasized the slow pace of change in healthcare. He was reported to have said something like,
“Healthcare is the only industry where you can say the same thing for ten years and still be a visionary.”
Athenahealth is a disruptive innovator that wants to provide physicians with cloud based information services that “lets doctors be doctors” and hopes that their products will provide transparency about costs and services for patients. You might be interested in a TEDMED talk where Bush gives his analysis of what is wrong with the current status of nonprofit care and what is possible if innovation and the power of market forces were allowed to make a profit improving care delivery.
Perhaps the foundation of the resistance to change and innovation in healthcare comes from its culture. Resistance to change is a logical extension of our well worn strategic admonition, primum non nocere, or if you prefer a slang translation, “If you can’t make it better, don’t make it worse”. That advice has served us well for as long as we can remember and predates the Hippocratic Oath. Certainly it is an ethical requirement that any new approach or treatment be at least as effective as the treatment or approach it replaces.
Healthcare finance, especially fee for service payment, was mentioned as a recurrent theme when the barriers to innovation were discussed. I was surprised that one of the most vigorous critics of fee for service payment, because of its negative impact on innovation, was a Vice President and Chief Strategic officer from a very large midwestern health system that is largely financed by fee for service payment. Importantly, no one defended the value of fee for service payment. Everyone at the conference seemed to recognize the difficulty of getting the attention of physicians and healthcare leaders for innovation when they were wearing themselves out trying to generate the volume of traditional services necessary to survive in the passing world of volume. No one knew when fee for service payment would be gone or if it would be relegated to a less potent force as a part of a new process of value based reimbursement like ACOs or mechanisms of bundled payment, but everyone agreed that of all the issues that challenge innovation, it was probably the most important.
The list of all the issues in the moment that I have lumped into the resistance of the status quo includes the nearly impossible jobs that face many clinicians and managers. Every available hour of the day is needed to do a job that in the end is inadequate. As my daughter in law once described her work as a medical assistant, it can be “soul sucking work”. We can’t expect them to accept the additional job of being innovators. People who are exhausted from running faster and faster in a race they can never ever win and where they are losing ground despite the fact that they are trying harder, can not do both today’s work and create tomorrow’s innovation. The old saw, “The harder I try the behinder I get” is their reality.
Making innovation possible may be the purview of large systems that have collected resources over the years, or of those entrepreneurs who see the opportunity to solve problems and create possibilities that free us from the drudgery of the current treadmill. Such innovations are out there. Ironically, the greatest challenge is not creating the product but getting the opportunity to demonstrate its benefit in a real system of care. It is a shame that an unstable business environment makes it harder to introduce new products or processes that can provide benefit for patients, relief for clinicians and an improvement in finance for the system. Atul Gawande has written about how hard it can be to get an innovation into common usage.
I am convinced that innovation will be the pathway by which we find our way to the Triple Aim, or if you prefer, the Triple Aim Plus One. Process improvement is essential but insufficient if we want to use fewer resources to do more for less. I am reminded of the wisdom of Dr. Robert Ebert, Dean of Harvard Medical School and Founder of harvard Community Health Plan. I have quoted more times than I can count what he said in 1965:
The existing deficiencies in health care cannot be corrected simply by supplying more personnel, more facilities and more money. These problems can only be solved by organizing the personnel, facilities and financing into a conceptual framework and operating system that will provide optimally for the health needs of the population.”
Dr. Ebert was rejecting conventional thinking. He was advocating innovative mechanisms for management and finance. He knew that fee for service funding of healthcare was antithetical to innovation and created a practice that was “prepaid”, supported by the most advanced IT systems obtainable at the time, and dedicated to bringing innovation to the practice of medicine, the delivery of care, and the preparation of the next generation of caregivers. It was a great idea and it was mightily resisted by the status quo. What Dr. Ebert was trying to do was even misunderstood and sometimes misdirected by those who were close to him, but progress was made. I see his spirit living on in the efforts of today’s innovators and believe that what he called for is coming closer every day despite the fact that the road to the Triple Aim has never been a superhighway. You can continue to expect a bumpy ride.
