The healthcare industry is at a boiling point; spending has increased decade after decade while patient outcomes have remained stagnant and revenues and margins continue to fall. New models of care have failed to “stick” and both public and private hospital systems are struggling to strategize around an uncertain future. Enter Amazon, Google, Microsoft, IBM, Apple, Salesforce, and Best Buy among others who all believe they are uniquely positioned to enter the previously abstruse healthcare market and leverage their experience and tech stack to solve some of the biggest and most ubiquitous problems plaguing our system, and in doing so, capture a piece of the growing $9.6 T market. How can health systems, payors, and other incumbent stakeholders self-disrupt before the status quo is changed and the traditional model begins to fail as it has across so many other industries post-disruption?
Earlier this month Healthbox hosted a select group of stakeholders from across the industry to explore this question and discuss the implications of the inevitable collision course we have already begun to witness. While the future remains uncertain, here are key themes and takeaways that arose from these thought leaders:
Simplify the system
Administrative simplification and reduced transactional friction should be the goals of digital transformation and these principles can be learned from industry outsiders. Recent healthcare innovations such as bolt-ons, requiring double documentation, have largely added to the daily workflow of clinicians, creating increasing levels of complexity and convolution within the system as a whole. Innovation however, does not have to come in the form of new, never-before-seen products. A viable option for innovation is to simply refine the value chain by means of changing the traditional business model (think Walmart or Costco). New business models that leverage data, automation, and the reduction of transactional friction will be better suited to compete within the tech enabled ecosystem of the near-future.
Address Market Imperfections
Market imperfections can be reduced through greater data transparency, interoperability, and end user (patient) ownership; leading to empowered consumers of healthcare resources. Possible investment and opportunities in this area which were identified are wide-ranging, including:
- Interoperability and the break-down of data silos,
- Engagement of patients by means of developing CRM capabilities to manage the patient experience and the delivery of care,
- Data transparency to support more efficient decision making and market behavior, democratization of data,
- Data liquidity and the emancipation of the EHR to create a more user-friendly tool, and
- AI and ML as a means to further optimize care and reduce process variation.
Throughout all of this one thing remains clear, the oft overlooked patient should be at the center of our efforts. Our current system has not been designed with patients in mind despite currently operating in what some are calling “The Age of the Customer”. Across other industries we observe market share capture through consumer engagement and empowerment, and the healthcare industry should be no exception. Organizations who create strategies with this in mind will likely have success going forward.
Embrace New Entrants
Innovators, new entrants, and incumbents all have a seat at the table where orthodoxies can be challenged, new opportunities identified, care models re-defined, and incentives realigned through business model innovation. Health systems are currently stretched beyond their limits and struggle with inadequate access to data, lacking data interoperability, and poor tracking and sharing of data; all of which can largely be solved by new entrants in a variety of ways. The new entrants are not burdened by historical “baggage” or “orthodoxies” in terms of how they approach solving problems, rather they bring a completely new set of ideas, assets, and strategies with them to the table which can ultimately lead to a mutually beneficial ecosystem.
When thinking through strategies going forward with regard to competition, co-operation, and co-opetition organizations should keep these three themes top-of-mind. The existing infrastructure that health systems have developed will provide the groundwork for the ecosystem of tomorrow, but new entrants will largely dictate how this evolution occurs. Health systems and other incumbent players must look inward at their own operations and orthodoxies to determine where their core competencies lay and why certain problems have persisted. With regard to competition, co-operation, and co-opetition, it comes down to the willingness and capability of the health system to self-disrupt, and their appetite for self-determination. Partnerships provide immediate synergistic outcomes if both parties are aligned in their mission, but do not beget the agency that comes with a long term, strategic plan to outcompete, centered around the core competencies that an organization can offer.