5. Integrating new approaches into established organizations

No matter how important new firms are to innovation in healthcare, much of the activity in the industry continues to flow through established firms—providers, insurers, and suppliers—that also must engage in innovation to increase value. A key question is how the benefits of new insights can be integrated into these established organizations.

A. Bringing new ideas into established firms:

Established organizations must maintain the flexibility to acknowledge new approaches while respecting the importance of fulfilling their long-standing objectives. Read more

B. Leveraging community relationships:

Established firms must leverage the benefit of strong relationships with customer “communities” as they innovate to improve value. Read more

C. Becoming more accountable:

Current entities must play a key role in increasing the accountability that all industry participants have for the health of the populations they serve. Read more

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A. Bringing new ideas into established firms

Established organizations must maintain the flexibility to acknowledge new approaches while respecting the importance of fulfilling their long-standing objectives.

The survey noted that, despite the relative strength of new entrants with respect to innovation in many domains, established firms are expected to lead efforts at innovation in basic medical research, electronic medical records, and pharmaceuticals. Though responses varied with each particular area of innovation, no one source emerged as a clear champion; participants see a mixed innovation environment with two general predilections:

1. In general, they expressed greater confidence in the ability of the private sector, rather than the government, as a “critical” source of innovation; in eight of the eleven innovation areas, the private sector was expected to lead the way.

2. Speed-to-market has been the hallmark of disruptive technologies produced by startup companies. In seven of eleven innovation areas, survey participants believed new entrants would prove more critical than established firms.

These results highlight the fact that healthcare is characterized by numerous established organizations that cannot simply be bypassed by new entrants. Rather, we must find ways to improve established organizations by incorporating the learning that emerges from decentralized innovation. As William W. Chin, MD, Executive Dean for Research, Bertarelli Professor of Translational Medical Science and Professor of Medicine, Harvard Medical School, observed, “Product life cycles are getting shorter, but the need for new therapies remains. When our usual way of doing things costs too much and takes too long to make effective, safe therapies, we need to find alternative models for progress.”

Fig 5.1: More critical to foster innovation: private sector or government?

Fig 5.1: More Critical to Foster Innovation: Private Sector or Government?

Fig 5.2: More critical to lead innovation: new entrants or existing firms?

Fig 5.2: More Critical to Lead Innovation: New Entrants or Existing Firms?

Reflecting on the limitations of current innovation models, Viehbacher noted that the old model of intensive internal research and development, focused on precise molecules, is not as effective as it used to be. “One of the things we are doing as a company is to get our scientists outside those walls and into the ecosystems” of research beyond the company’s own laboratories. The challenge is that these ecosystems of related ideas and innovations may be too broad in scope to be practically useful. He added, however, that “there are ways of filtering and synthesizing information coming from around the world, and you can direct that to ultimately finding solutions for patients.”

“How do we improve value within the existing system? What innovations are necessary so that our biggest institutional investments become, not dinosaurs, but dynamic contributors to progress?”

– Robert S. Huckman

Albert J. Weatherhead III Professor of Business Administration, Harvard Business School

Mussallem highlighted the conflict between efficiency, which requires a narrowing of options, and discovery, which must open up more options. “We need some kind of harmony and a system that could do both,” he said. “It’s a challenge we struggle with broadly as a society.” Our largest delivery systems—complex networks of teaching hospitals, physician practices, and specialized care units—are not just “too big to fail”; they are too rich with talent and experience to be neglected. In his introduction to the Improving the Value of Care Delivery panel, Robert S. Huckman, Albert J. Weatherhead III Professor of Business Administration, Harvard Business School, turned the conversation from speculative potentials to present realities. “We still have to think a lot about the system we have,” he said. “How do we improve value within the existing system? What innovations are necessary so that our biggest institutional investments become, not dinosaurs, but dynamic contributors to progress?”

Gary L. Gottlieb, MD, President and CEO, Partners HealthCare, noted the unique challenges faced by tertiary teaching hospitals at the heart of many of the most advanced delivery networks. “As we focus on value in the context of shrinking resources, there is significant tension within the multifaceted mission and multiple purposes of our institutions. These institutions exist to provide extraordinary care,” Gottlieb noted, “but they also must use that care to inform science and develop science that improves and informs care. The traditional revenue streams that support these activities are intertwined, and each of them is challenged in the public and private economies they face in the short- and long-run horizons.”

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B. Leveraging community relationships

Established firms must leverage the benefit of strong relationships with customer “communities” as they innovate to improve value.

While Gottlieb emphasized balancing commitments to care delivery and research in his approach to integration, Nancy M. Schlichting, CEO, Henry Ford Health System in Detroit, approached the issue from a different angle, proposing that community obligations are critical to the effectiveness of healthcare delivery. “Healthcare is not a level playing field,” she said, reflecting on the special challenges of coordinating care in an exceptionally difficult environment. “We are a safety net organization: Fifty percent of the population in Detroit is either on Medicaid or uninsured. Poverty levels are very high. Mental illness and substance abuse are very high. Twelve percent of Henry Ford Hospital’s revenues are uncompensated.”

Yet, Schlichting noted that community itself can be part of the solution. “We also have to have much better collaboration with community organizations,” she said. “In Detroit, food, housing, senior services, schools, and churches are also part of our patients’ lives and can be influential in the improvement of the care delivery that we provide.” In Henry Ford’s community context, nonmedical solutions can be as important as or more critical than clinical care in improving overall population health. “We buy microwaves and we install ramps to make homes more accessible as much as we provide medications and other kinds of services,” Schlichting said.

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C. Becoming more accountable

Current entities must play a key role in increasing the accountability that all industry participants have for the health of the populations they serve.

The future of many established organizations will hinge on their ability to absorb greater responsibility not only for providing specific products and services, such as procedures, devices, or pharmaceuticals, but also for maintaining the health of the populations they serve. As Reisman observed, “We have a completely new approach that is much more oriented for value. We’re concerned about the overall health of the population—not just the people we touch, not just the people we treat, but the entire population.”

To become more accountable, however, established organizations must become more agile and more capable of coordinating care across numerous providers and suppliers. Critical to their roles as coordinators, established firms must be key participants in identifying and refining the observable measures on which their performance will be evaluated. This process must occur in a manner that allows established firms to meet customer needs within the wider social, political, and economic contexts of their communities. “The common characteristics of all these things,” noted Schlichting, “are multidisciplinary ownership of the care experience over time, great information sharing across all dimensions of care, a focus on the patient and family, a true measurement of outcomes, and a strong focus on improvement.”

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