Consumers vs. Producers of Innovation
As the healthcare industry faces unprecedented challenges to improve quality and access to care and lower costs, there is a widespread need for ingenuity and the adoption of new solutions. In an article posted by Neil Patel, President of Healthbox, in May 2017, Patel references that organizations across the country are making innovation a priority, incorporating it as a core pillar of their larger strategy.
Patel further drills down into organizations taking the position of “consumers” of innovation, “producers” of innovation, or in some cases, both. Organizations that consume innovation search for solutions on the market that solve their specific problems, while organizations that produce innovation develop internal programs that also address their pain points, as well revenue (diversification and growth) and human capital investment (recruitment and retention). This article focuses on the latter, or the strategy of producing innovation, as it is not only a more nascent/under-analyzed approach but also one that continues to expand and generate significant value for healthcare.
Producing Innovation for a Competitive Edge
Producers of innovation develop internal programs that engage their employees, which can provide a unique competitive edge. Healthcare employees are often extremely skilled at diagnosing organizational problems, as they are close to, or even directly experiencing, those problems. Employees are also skilled at understanding the nuance around implementation and change management, and can thus more effectively and efficiently incorporate a solution into their organization’s specific workflows and culture. Furthermore, for those solutions developed with commercial viability, there is an opportunity to generate additional revenue streams for the organization (and often the employee inventors as well).
Depending on an organization’s priorities and willingness to take on risk, innovation programs may differ in several key areas, including structure, size of investment, type of employees engaged, focus area, duration, and more. Some specific examples of programs we see today range from tech transfer offices, innovation centers, and accelerators, to employee innovation education and idea contests or challenges.
Key Considerations to Execute a Successful Program
It has become apparent, even at this early stage of adoption, that an innovation program that works for one organization may not work equally as well for another. However, Healthbox has found that no matter the differences across programs, there do in fact exist several similarities, or four key factors that produce a successful initiative.
#1: Clearly Define an Innovation Intent
Innovation programs should be guided by an “intent” or a clear articulation of why the organization is devoting resources to the strategy (beyond the common generality “we must innovate to stay ahead of competitors”). For example, an organization may want to develop novel internal processes for improving care delivery, while others may seek to produce new products or services that could scale across and outside the institution to bring in revenue. More often than not, organizations also choose to narrow their innovation intent to focus on a certain clinical specialty or to solve a specific problem.
Trinity Health, for instance, launched an “Innovation Challenge” in 2016 with a clearly defined intent. The Challenge aimed to help identify, fund, and implement ideas focused on reducing readmission rates and improving care for patients who are dually eligible for Medicare and Medicaid. Ideas were submitted largely by Trinity Health ministries and the system office, as well as some organizations external to Trinity Health that were willing to work with a Trinity Health ACO. Anna Marie Butrie, Vice President, Innovation Program and Services for Trinity Health says: “These innovations were designed specifically to help us better serve some of the most vulnerable patients in our communities in a compassionate and transformative way.”
#2: Establish and Track Metrics (While Being Open to Fluidity)
Measuring innovation in healthcare, and most industries for that matter, can be nebulous with its varying definitions and expectations. However, establishing performance metrics for an innovation program is critical for success. These metrics will likely be (and should be) fine-tuned as the program evolves to best reinforce the program’s innovation intent. And more pragmatically, metrics are often modified because it can take considerable more time to accumulate innovation data.
One way to think about measuring an innovation program is through what goes into the innovation process (i.e, inputs) and what should come out of it (i.e, outputs). Outputs can be thought about as the ultimate results an organization wants to achieve with the program, either from an organizational or commercial perspective. Inputs can be thought about as how the organization wants to fuel innovation, or what’s accomplished internally to help hit targets. See the table below for example metrics.
An innovation program will only be successful if employees are educated about the initiative and inspired to participate. Organizations can educate and inspire by effectively communicating the program’s intent, the value it will generate, and how it works. This may be through emails, articles in newsletters, announcements during staff meetings, promotional videos, fliers, screensaver campaigns, workshops, etc. Whatever the method(s) of dissemination, the ultimate goal should be to reach as many employees as possible in order for the innovation program to be “built in,” to the broader organizational culture, rather than loosely “bolted on.”
Cambia Health Solutions, a health insurance company based in Portland, provides an excellent example of how to effectively leverage a program to build innovation into the entire organization’s DNA. Since 2011, Cambia has partnered with a social technology to enable crowdsourcing of new ideas from its employees. It’s Chief Innovation Officer, Mohan Nair, says that through its program, “anybody at any level can say, ‘I challenge us to solve this problem. I challenge us to identify solutions in this area.” Results of the initiative have been impressive: over 1,200 ideas have been generated from a diverse group of employees; five new companies have been created; $171 million in new revenue has been generated; and 84 percent of employees feel that Cambia encourages innovation, as opposed to 34 percent when they started.
#4: Balance the Strategy with an External Lens
At Healthbox, we believe that organizations should take a dual-approach to innovation- by activating the entrepreneurial spirit from inside their four walls, as well as embracing the power of disruptive thinking from the outside. A 360-degree view is what drives consistent innovation processes with consistent results.
An example of an organization that embodies this dual inside/outside principle is Intermountain Healthcare. Intermountain has always recognized that its frontline clinicians and other employees are extremely skilled at diagnosing organizational pain points. However, when it came to the next step of successfully growing a solution, employees lacked the deep business acumen, understanding of the broader market, and time/resources to do so. In 2013, Intermountain filled this innovation gap by partnering with Healthbox to launch the Foundry Program. Now in its fourth year, the Foundry enables the organization to put business rigor around commercially viable, employee-led inventions, such as by analyzing key market trends, competitive solutions, and other opportunities or risks for advancement. The approach is unique, as many of these market insights come directly from the Intermountain Innovation Fund, through which Healthbox serves as the general partner of, to source, evaluate, and invest in innovative startup companies. By having a continual pulse on the market through the Fund, the Foundry is provided with the necessary objectivity and a process to determine which employee-led ideas demonstrate merit to be supported by organizational resources, and which do not.
In summary, no matter the approach taken, organizations need to be intentional when it comes to building their programs and committing resources to this type of strategic innovation. These pursuits can require long time horizons, willingness to take on risk, and fortitude to not see innovation programming as a budget easily cut if the organization falls on hard times. Yet, when built and measured thoughtfully, Healthbox foresees organizations continuing to reap tremendous value.
Healthbox presents on “Prioritizing Internal Health System Innovation” at the following upcoming conferences:
August 23, 2017: Health:Further Festival
September 16, 2017: Stanford Medicine X (co-presented with Intermountain Healthcare)