The following opinion piece was written by Scott Snyder, a senior fellow at Wharton’s Mack Institute for Innovation Management, chief digital officer at EVERSANA, and co-author of Goliath’s Revenge: How Established Companies Turn the Tables on Digital Disruptors.
Outsider attempts to reinvent health care have done little to move the needle despite billions invested in promising concepts like Microsoft’s HealthVault, IBM’s Watson Health, Theranos, Google’s Contact Lens, Drugstore.com, and more recently Helix and Haven. These were backed by some of the most powerful companies and investors in the world, yet they fell significantly short of driving lasting change, and in some cases, as with Theranos and Watson Health, may have set the industry back in breaking through to innovative models for delivering health care. So, what happened?
Maybe they failed to recognize that the health care industry has its own immune system that makes it extremely difficult to change from the outside. Given the tremendous training, process discipline, and specialization needed to deliver high-quality care, and the natural risk aversion with patient lives at stake, attempts to reinvent or circumvent the traditional care delivery system have typically failed. But just like breakthrough immunotherapies, these same antibodies or protections in the system can be harnessed to attack and deliver disruptive innovations from the inside.
While COVID-19 has demonstrated the heroic behavior of our health care workers fighting through the unique and tragic challenges of a global and highly lethal pandemic, it has not changed the massive underlying challenges that have been building in the U.S. health care system for years, such as:
Today’s annual health care spend is a whopping $4 trillion and expected to exceed 20% of GDP by 2028.
About 90% of that spend is for chronic disease and mental health conditions, many of which are preventable or can be effectively managed.
About 60% of adults have at least one chronic disease, and 40% have two or more.
If anything, the pandemic has shined a spotlight on both the disparities and inefficiencies in our health care system, with people of color having two to three times the number of cases, rate of hospitalization, and deaths from the disease.
However, COVID-19 has put just enough pressure on the current health care model to lower previous barriers as well as create new pathways for these innovations to take root. Telemedicine for many providers is up 1,000% or more. Penn Medicine alone went from 1,000 telehealth visits per month to 7,500 per day. In the U.S., the use of online pharmacies has increased by 45% over the last year.
Patient use of digital health tools and apps increased 37% during the pandemic. On the downside, hospital outpatient procedures dropped 60% on average, leaving a gaping financial hole for many providers to fill and potentially more patients at risk.
Failure to push the pedal now and use the crisis as a springboard for innovation would potentially squander all of the dramatic gains and send us back to a broken, financially strapped model of health care.
Silver Linings to Build On
Health care innovations have faced a number of big headwinds over the last decade that have now been tackled head-on to navigate the current crisis. These include health data integration and access, clinician adoption, regulatory approvals, and reimbursement models.
Connecting Health Data — The health care industry has spent the last decade or more digitizing patient records and improving policies around data privacy. The Department of Health and Human Services announced it will waive HIPAA penalties for telehealth cases conducted in good faith and has reduced the penalty cap for some violations.
Getting Clinicians Onboard — As the latest generation of digital health solutions becomes more integrated with medical records and physician workflows, clinicians are seeing the value of using this data to fill in gaps between patient visits, guide patient behaviors, and drive diagnostics and early identification of issues to improve patient care. In fact, one survey found that physicians were 83% more likely during the pandemic to adopt digital health solutions for their patients.
Reimbursement Catching Up — The Centers for Medicare & Medicaid Services expanded reimbursement for telemedicine by waiving the video requirement for many services, allowing billing for outpatient services furnished remotely, and expanding the types of providers eligible for remote-care reimbursement. Payers are even beginning to reimburse digital medicines and treatments like Propeller Health, Omada, and Pear Therapeutics.
Regulators Adapting — Many governors and state health agencies reduced state licensure barriers, allowing clinicians to provide care across state lines more easily. The Food and Drug Administration has streamlined the pre-certification process for digital therapies and recently launched a Digital Health Center of Excellence.
“COVID-19 has put just enough pressure on the current health care model to lower previous barriers as well as create new pathways for these innovations to take root.”
How Incumbents Can Set the Pace
Our book, Goliath’s Revenge: How Established Companies Turn the Tables on Digital Disruptors, outlines six rules to guide established companies to become disruptors. The importance of these rules and the shift in mindset that goes along with them is being amplified in a post-COVID health care future as progressive incumbents set the pace.
Rule 1: Deliver Step-change Customer Outcomes. When the world is shocked into a completely new way of working in almost every industry, customer expectations also change dramatically. It’s not good enough just to do a little bit better than yesterday. Now that many patients have experienced virtual care, instant access to their medical information, online ordering and delivery of medications, home diagnostic kits, and even vaccine development at record pace, the bar will only go up. A great example of an incumbent driving a step-change in patient experience is Sutter Health’s symptom-checking chatbot that offers the equivalent of 60 doctors in a patient’s pocket to answer questions around the clock, including questions about COVID. Since the pandemic, Sutter’s chatbot use has tripled, with about half of queries happening outside normal office hours. Penn Medicine has moved more than a dozen chemotherapy regimens to patients’ homes, replaced follow-up clinic visits with home care and image sharing by text, and remotely manages complex patient populations, from COPD to COVID patients. All of these programs dramatically increase the value of care delivery and patient convenience.
Rule 2: Pursue Big and Little Innovation. Going forward, innovation cannot be relegated to small teams or outposts. Health care providers must empower their entire staff to continuously innovate around the current care delivery model to play the current game better, while also creating a protected path for breakthrough innovations that change the game. Penn Medicine prides itself on driving thousands of innovation experiments per year across all aspects of their operations at a similar level to Google, while also incubating big bets like their new Gene Therapy Center at a former Big Pharma research facility, working to shape the next “Cellicon Valley” in Philadelphia.
Rule 3: Use Your Data as Currency. Most health systems are sitting on massive stores of clinical and operational data, but they struggle to unlock the full value of this data due to skill gaps, siloed systems, or perceived security/privacy risks. Mayo Clinic recently created the Clinical Data Analytics Platform, which contains more than 12.5 million anonymized patient records, including lab values, vital signs, and clinical notes. With all patient-identifying information removed, researchers can analyze the data to find connections and perform medical research. Mayo Clinic is using the data to perform numerous COVID research studies and develop new therapies, a process that otherwise could take years or would be impossible without the platform. Penn Medicine has effectively used data and machine learning for applications ranging from increasing the appropriate use of palliative care to identifying patients who need mental health and opioid treatment, driving better patient care and cost savings.
Rule 4: Accelerate Through Innovation Networks. Digitally minded health care companies realize they can’t stay ahead of disruption on their own and need to tap into a network of partners to accelerate their innovation efforts. North Carolina’s Novant Health partnered with Zipline, which provides drones capable of flying up to 80 mph with critical payloads. Novant was one of the first providers to gain government approval for drone deliveries of personal protective equipment and other medical supplies to remote and at-risk areas. Indira Gandhi General Hospital in India partnered with Docdot to bring their AI-powered smartphone app for remotely detecting and monitoring patients with COVID-19. While Penn Medicine builds novel applications internally, they’ve partnered with a broad network of best-in-class technology partners, from on-demand transportation and automated wound assessment to AI-based conversational agents, to engage patients once they are back at home.
“A number of leading health systems have realized that digital transformation is propelled by talent, not technology.”
Rule 5: Value Talent over Technology. A number of leading health systems have realized that digital transformation is propelled by talent, not technology. Penn Medicine brought in a Silicon Valley leader from Intuit, Roy Rosin, to head up innovation and has now created multiple centers for innovation to integrate new digital thinking with legacy talent to re-imagine different parts of the health care value chain and patient journey. Penn also benefits from clinicians with deep insight into the friction points in care delivery who also code, and clinical champions trained in behavior change, complex problem-solving, and rapid experimentation methodology. Another example is Ascension partnering with Google to transform health care delivery by marrying Ascension’s institutional knowledge with Google’s digital engagement, cloud, and AI capabilities.
Rule 6: Reframe Your Purpose. To inspire the existing workforce, attract the next generation of digital talent, and fuel innovation, health care companies must double down on their patient-driven missions. Discovery Health has taken on the traditional health insurance model by harnessing their purpose of “helping members live healthier lives.” They launched Vitality, a digitally-driven behavior change platform to enable employees to track and improve their health. Vitality has now become the largest corporate wellness platform in the world, including partnerships with Manulife, Generali, and Ping An, and has now expanded into auto insurance, life insurance, and banking by enabling positive behaviors for their members. Penn Medicine is using its patient-centered mission to shift to value-based payment models to solve for better patient outcomes over volume or care. As part of this transformation away from short-term revenue focus, Penn Medicine’s team has eliminated unnecessary follow-up appointments for both patient convenience and to accelerate access for new patients.
Every Leader Has a Stake in the Game
The health care system is poised to undergo more change in the next five years than the past 50 years due to both the stresses and accelerations created by the pandemic. Research from McKinsey found that 90% of health care executives believe COVID-19 will fundamentally change their businesses, and 85% predict lasting changes to customers’ preferences. But these step-changes in both operating and business models will only happen and drive sustained impact if they are done from inside of the health care establishment with the aid of outside innovators. Leaders in both incumbents and attackers in the health care space will need to reorient and even restructure their organizations to execute on these new opportunities, and leaders outside of health care will need to be ready to adapt and benefit from these innovations as health and wellness become overarching priorities for every workforce in the future.