Many of today's large university teaching hospitals have established track records of new technology innovation. The Mayo Clinic has traditionally licensed new technologies to other companies for them to productize. With all the outsourcing that's available today, the Mayo decided to do it themselves this time (press release). That's the product, pictured at right.

[...] in early 2003, [Mayo] researchers sized up MRI technology for capturing images of the forearm
and hand and decided they could produce a better-quality device -- and
do it faster -- if they didn't pass the idea off to somebody else. So
Mayo hired IBM (IBM
) to help design and manufacture the product, and relied on medical equipment giants GE (GE
), Siemens (SI
), and Philips to market and sell it.

It looks like Mayo made the right decision. Within eight months of its
initial conversations with IBM, the tech giant had delivered the new
devices, Mayo Clinic MRI coils, for use in Mayo's own medical
facilities. A second version, begun in January, 2004, was readied for
sale by GE four months later. A more typical time-to-market span in the
medical-device field is 16 months to 24 months, according to "How Fast
is Fast?" a product-development benchmarking study by IDEO, one of
America's leading contract design firms.

That's 8 months to the first manufactured prototype, and total time to market of less than a year. Wow. A typical time to market for a medical device is more like 2 to 3 years (or longer if you screw up), especially if it is truly new and not just "reskinned" or upgraded.

This radical new business model has been around for some time. There's books about it, and several published profiles on companies who've done it - here and here. It all makes the head spin, doesn't it? Another great book on this topic can be found on the Connectologist's Reading List, called Value Migration, by Adrian Slywotzky.

With this new business model the Mayo retained greater control and ownership of their
intellectual property, they got a much shorter time to market (with a
quality product), and they stand to gain more financially - they've
sold 100 so far. I wonder what being reduced to a distribution channel
will do to GE, Siemens and Philips' business models. Will the big
medical device vendors offer contract manufacturing to go along with
their outsourced distribution? Design services? In an industry with a serious case of "not invented here" syntrome, I'm sure traditional
medical device executives would be outraged - but it may not be such a
bad idea.

Of course, if it was easy then everyone would be doing it. Competitive barriers are the biggest threat to innovation in health care. Outsiders might think FDA regulations are the big barrier - I don't think so. The biggest barrier comes from group purchasing organizations (GPOs). But the Mayo clinic sidesteps that nicely by using GE, Siemens and Philips (who all have GPO contracts for a variety of things) as their distribution channel.

What other examples of innovation and new business models are changing the health care market? Let me know!