Much of the tech innovation occurring in health care is happening in interstitial markets. Yet some of the innovators or their prospective customers are not fully aware of interstitial markets or their impact. We’re going to define interstitial markets, look at why they’re a big deal, and discuss how you can apply this newfound knowledge.
Health care is made up of organizational silos. These are organizational units most concerned about their own workflow and operations. At the micro level, silos exist within larger organizations like hospitals as departments or care delivery areas. And at the macro level, the silos are the various trading partners that form a loosely organized, yet flourishing complex of entities working to deliver health care. For this discussion, we’re going to refer to silos at the micro level and macro level trading partners together as trading partners.
The perennial question, “What’s in it for me?” does much to explain why most technologies in health care have focused on individual trading partners. Each of these prospective buyers is its own organizational unit. For example developing and selling a radiology information system to a radiology department is pretty straight forward, as is automation for a chain of pharmacies or a physical therapy business. Most of the IT and medical device technology for these organizational-centric market segments are fully adopted mature replacement markets.
Interstitial space is the space between structures or objects, or in our case, trading partners. Interstitial markets exist because patients cross multiple trading partners during an episode of care. This interstitial space between trading partners was often spanned with manual efforts using phone calls, faxes or printed records that are later scanned into receiving information systems. When automation replaced the paper based processes within health care silos the use of fax machines became an obvious workflow bottleneck.
One of the best examples of the rise of interstitial markets at the micro level are messaging middleware solutions in hospitals used for tasks like alarm notification, messaging and collaboration. The focus of these systems is not silos, but the patient related information that must flow across and between silos to effect patient care. Many messaging and collaboration solutions have taken the leap to solutions that span multiple trading partners on a macro level. More examples of interstitial apps include patient engagement, care coordination, chronic care management and care plan management, electronic prescribing and more.
Interstitial markets are a big deal because they tend to be new, high growth markets with little adoption. Some of these markets have external incentives driving adoption created by regulations or reimbursement policy, such as reduced reimbursement for certain types of readmissions. Electronic prescribing and chronic care management also fall under this “external incentives” category. Some interstitial market segments are driven by the promise of efficient technology that solves heretofore intractable and very inefficient operational workflows. These solutions are justified on improved operating efficiencies and ROI. Many of the messaging and collaboration oriented solutions, including alarm notification and some patient engagement and care coordination solutions, are bought and sold for their operating efficiencies and ROI.
By necessity, the workflows of solutions targeting interstitial markets often span multiple trading partners. This fundamental characteristic can have many consequences — let’s look at a few.
Every trading partner included in a solution’s design already has a collection of legacy applications and/or medical devices. Often there is a market requirement for connectivity or interoperability with these legacy point solutions. To borrow a term, interstitial solutions overlay legacy enterprise applications. Cross-vendor connectivity is never easy, especially as a startup. There are many levers impacting the ability to achieve the required connectivity, including product design, business model, services, and overall value proposition. Currently, there’s no one best way to drive connectivity. Just remember, the term proprietary connectivity is an oxymoron.
In the cottage industry that is health care, the question “What’s in it for me?” must be considered for every user type and trading partner. Everyone should benefit in rough proportion to their effort expended to use interstitial market solutions. If things are out of whack, short and long term adoption can suffer and counter productive workarounds will emerge. If the benefit and effort do not balance, look to other means to even the scales.
Interstitial markets often include a network effect component. For a variety of reasons, the network effect in health care delivery is neither quick, easy or a certainty. The network effect is achievable and can have a powerful impact on market adoption, customer lock-in and erecting competitive barriers. Both go-to-market strategy and product design have a big impact on the ability to leverage the network effect.
A more subtle but no less important consideration is the shift from enterprise-centric to patient-centric solutions. An enterprise-centric focus is like manufacturing where patients are the widgets and the focus is on operations and performance applied to all patients. The focus here is often on operational transactions such as the number of surgical cases run through an surgical suite daily, patients seen per doctor per day, or patient flow through the ED or hospital bed turnovers.
Patient-centric solutions are just as concerned about productivity, but through a patient-centric lens rather than a transactional enterprise lens. The fundamental difference here is that interstitial solutions enable transactions that cross trading partners, unlocking new features and benefits in service delivery to patients. This is something enterprise-centric solutions are currently unable to do. Traditional HIT vendors have taken a small step into interstitial markets, with the integration of independent and owned physician groups with hospitals. If one extended this approach to other interstitial markets, the solution would be for all the silos and trading partners in a health care community to buy all their software from one company. While this would be an attractive outcome for HIT market gorillas, it is not a likely outcome.
We’ve discussed interstitial markets, and why they’re a big deal. Next we delved into some of the unique characteristics of interstitial markets. These emerging markets are only going to get bigger, and some of these innovators may end up dominating the HIT market in years to come.