U.S. Healthcare: Innovation in healthcare

The ultimate goal of healthcare innovation is to improve our ability to meet public and personal healthcare needs by optimizing the performance of healthcare systems. The W.H.O. defines healthcare innovation as any “new or improved solution with the transformative ability to accelerate positive health impact.”[1] To meet this definition, any policy, practice, system, product, technology, service, or care pathway must: (i) be novel, (ii) include a product or therapy, and (iii) have an intended or proven benefit for the patient.[2]

The U.S. is the most innovative economy in the world, with American companies and institutions driving the development of advanced and emerging technologies on a global scale. Successful innovation is more than just inventing new and more effective ways of solving problems—it’s also about adoption and diffusion (implementation).

Healthcare organizations have a reputation of being resistant to change. This reputation is well earned, but is not unique—it took the telephone 64 years, electricity 45 years, computers 23 years, mobile phones 16 years, radio 12 years, and the internet 13 years to achieve 40% consumer adoption.[3] Barriers to adoption are industry-specific. In healthcare, major barriers include an entrenched culture of traditions, hierarchies, and established practices, with many institutions viewing innovation as a risk rather than an opportunity. Other barriers include limited budgets, intense competition, multiple stakeholders with misaligned incentives, policy and government regulations, and consumer views and opinions (for effective adoption, an innovation needs to be desired by the end-user).[4,5] 

An additional barrier that deserves special mention is the cost of failure. Innovators have long known that failure is to be expected—a business cannot develop a breakthrough product or process if it is not willing to take risks. “The fastest way to succeed,” the former CEO of IBM, Thomas J. Watson, once said, “is to double your failure rate.” When businesses fail, they lift themselves up off the floor, dust themselves down, learn from their mistakes, and move forward. When healthcare fails, the consequences can be catastrophic—patients die and providers get sued, whether or not they did anything wrong. This has led to a conservative mindset among both patients and providers. While such ‘medical conservatism’ serves to protect against hasty adoption of unproven therapies and potential harm to patients, being overly cautious risks missing opportunities for transformative improvements in healthcare delivery and outcomes.[6]

There is no penalty for following custom and practice, but if you try and make an innovative change and it fails, the repercussions for the clinician or the trust/clinical commissioning group board can be considerable.

-- Christopher Kelly & Anthony Young --

When it comes to innovation, it’s important to point out that medical care is not the same as healthcare.[7] Medical care refers to the administration and delivery of care—it is what governments, hospitals, providers, and patients do each day to improve their health and well-being. Healthcare is the end result of all of the efforts to treat, control, and prevent disease, illness, injury, or disability, and can be measured at the level of the individual or population. Medical care is what can be influenced through innovation, policy, and culture change; healthcare is the outcome you measure to see whether the changes you implemented are working. Stated differently, medical care is the ‘lead metric’ and healthcare is the ‘lag metric.’ As such, healthcare innovation is perhaps more accurately referred to as medical care innovation.

Medical Care Innovation

Medical care innovation can be divided into three broad categories,4 all of which should be judged on their ability to objectively improve clinical outcomes, reduce resource utilization (cost), and improve the patient and provider experience:

1. Technological innovations. This includes new drugs and drug delivery systems, diagnostic tests, and medical devices. It also includes needed IT innovations to seamlessly (and safely) share healthcare information between providers to better coordinate care, avoid unnecessary replication of tests, and reduce medical errors. How do these new products get validated and approved? The BMJ clinical evidence team reviewed 3,000 treatments used in the U.K.’s National Health Service and found that half were of unknown effectiveness and only 11% were clearly beneficial.[8] Moreover, in addition to fulfilling the short-term efficacy and safety requirements of the various regulatory agencies, consumers are demanding more accountability from healthcare innovators, including cost-effectiveness and long-term safety data.  

2. Innovations that change the way consumers buy and use medical care: Consumers have a choice in how they engage the medical community. They are looking for value (a quality product at a good price) and ease of use. Models of care that empower the consumer are likely to be more successful. For example, health plans that offer low-cost, high-deductible insurance and provide upfront transparency around costs (no ‘surprise billing’) offer consumers more control over their healthcare spending. Other innovative consumer-facing strategies include user-friendly websites to address FAQs, broadening the use of telemedicine, and ‘task shifting’ from physicians to nurses/physician assistants.
   

3. Innovations that generate new medical care business models: Early efforts to address challenges in healthcare used a reductionist approach: identify the problem, break it down into its component parts, fix each component, and then put Humpty Dumpty back together again. This approach works for simple systems where the relationship between cause and effect is linear, but quickly falls apart when dealing with complex adaptive systems such as healthcare, where individual ‘agents’ (providers, patients) act locally and independently leading to emergent behaviors at the system level that cannot be predicted or controlled.[9] Most recently, in the absence of a coordinated response at the federal level, healthcare systems across the U.S. are consolidating—both horizontally (merging small independent physician groups into larger organizations) and vertically (bringing the treatment of chronic diseases to a single location)—and centralizing command-and-control to a small group of decision-makers at the system level, many of whom do not have a deep understanding of the industry.[10] The goal of such consolidation is to increase efficiency (so-called ‘economies of scale’), control costs, and improve patient outcomes. Studies have shown that, in the majority of instances, none of these objectives are achieved. Hospital acquisitions typically result in higher costs, worse patient experiences, and no significant changes in outcome (such as hospital readmission or mortality rates).[11] Unfortunately, hospital mergers are likely to continue in the near future. Not only does this approach fail to offer a sustainable solution, but it is likely to have significant unintended consequences. Marginalization of frontline providers who no longer feel they have a voice in the care of their patients is leading to attrition of the workforce and to increasing unionization, not just of nurses but of doctors and medical trainees as well. Innovative business models are urgently needed to address the fragmentation of care delivery, incentivize collaboration and prevent ‘turf wars’ between competing interest groups, and simplify and rationalize payment templates. Examples of such innovative industry-facing business models include group care (such as ‘centering’ models of pregnancy or diabetes care), community-based cooperative care (local healthcare centers where family members can all get care at the same location on the same day), and shared cost-savings models between companies and healthcare systems such that both entities are equally committed to the successful implementation of a new product.  

The difficult trade-off

U.S. healthcare is the most expensive globally and its citizens are not guaranteed universal coverage—and yet it leads the world in healthcare innovation. On the surface this seems like a contradiction, but it is not. The establishment of a single-payer system (‘universal coverage’) will go a long way to solving such healthcare issues as coverage, access, and cost, but the government’s need to strictly control costs and require a return on taxpayer investment is likely to seriously constrain technology-based and consumer-focused innovation.[4] For example, governments would be encouraged to leverage their considerable buying power to keep drug and medical device prices low—a boon for consumers, but a potential bust for innovators and investors. It is not by accident that, compared with the U.S., European countries with universal coverage lack a robust venture-capital community to fund new healthcare technology ventures. Innovation in healthcare is hard. How best to balance the needs and demands of healthcare consumers, provide world-class healthcare at a population level, and simultaneously preserve a culture of innovation by addressing issues related to funding, regulation, intellectual property, scalability, and procurement will be the biggest challenge of the coming decade.

Note: If you haven't read the previous parts of this blog series, we recommend you to read it from our official website: US Healthcare: Misaligned Incentives, Why is US Healthcare so expensive?, US Healthcare: Lack of Engagment, and Tracking the satisfaction of end-user, the patient.

Authors: This Blog is Co-authored by Dr. Errol Norwtiz and Venkata N. Peri

References:

1. www.who.int/teams/digital-health-and-innovation/health-innovation-for-impact

2. Länsisalmi H, Kivimäki M, Aalto P, Ruoranen R. Innovation in healthcare: a systematic review of recent research. Nurs Sci Q 2006: 19:66-72. doi: 10.1177/0894318405284129

3. DeGusta M. Are smart phones spreading faster than any technology in human history? Cambridge, MA: MIT Technology Review, 2012. www.technologyreview.com/s/427787/are-smart-phones-spreading-faster-than-any-technology-in-human-history/

4. Herzlinger RE. Why innovation in health care is so hard. Harv Bus Rev 2006; 84(5):58-66.

5. Kelly CJ, Young AJ. Promoting innovation in healthcare. Future Healthc J 2017; 4:121-5. doi: 10.7861/futurehosp.4-2-121

6. Mandrola J, Cifu A, Prasad V, Foy A. The case for being a medical conservative. Am J Med 2019; 132(8):900-1. doi: 10.1016/j.amjmed.2019.02.005

7. Garson A, Holeywell R. Exposing the 20 Medical Myths: Why everything you know about health care is wrong and how to make It right. 2022 update. Rowman & Littlefield Publishers, London. 2019.

8. Smith QW, Street RL, Volk RJ, Fordis M. Differing levels of clinical evidence: exploring communication challenges in shared decision making. Med Care Res Rev 2013; 70(1):S3-13. doi: 10.1177/1077558712468491

9. Kahn S, Vandermorris A, Shepherd J, Begun JW, Lanham HJ, Uhl-Bien M, Berta W. Embracing uncertainty, managing complexity: applying complexity thinking principles to transformation efforts in healthcare systems. BMC Health Serv Res 2018; 18(1):192. doi: 10.1186/s12913-018-2994-0

10. Gondi S, Kishore S, McWilliams JM. Professional backgrounds of board members at top‑ranked US hospitals. J Gen Intern Med 2023; 38:2428-2430. doi: 10.1007/s11606-023-08056-z

11. 11.    Beaulieu ND, Dafny LS, Landon BE, Dalton JB, Kuye I, McWilliams JM. Changes in quality of care after hospital mergers and acquisitions. N Engl J Med 2020; 382:51-59. doi: 10.1056/NEJMsa1901383