Health care has a reputation for being 20 years behind in innovation, whether it's health care delivery, health care IT, or some other area, there are seemingly zillions of examples of great ideas that went nowhere fast (or excruciatingly slowly). Yet, health care innovations persist, developing new science, devices and treatments at a rapid pace. The problem in health care is determining which potential innovations will succeed and which will fail.

Whether you're a venture capitalist, entrepreneur, vendor, or health care provider wouldn't it be nice to be able to better evaluate the likely success of a particular innovation? If only we could identify the barriers to adoption early on, and bolster the chances for a new innovation. Most who have been in health care for any length of time experience a crisis of confidence when they've had enough of the seemingly arbitrary way in which some deserving innovations fail while others succeed. This is the point where many of us leave health care for more "rational" markets. Struggles around innovation are central to medical connectivity - automating workflows, integrating information systems with medical devices, new care delivery models (variable acuity units, remote monitoring) - all depend on innovation to succeed.

A reader and friend recently shared with me an article from the Harvard Business Review, titled "Why Innovation in Health Care Is So Hard." In this article author Regina Herzlinger offers a framework for considering innovation in health care - to identify barriers and gauge the likelihood of success. The following is my take on Herzlinger's Six Forces. You still need an in- depth knowledge and understanding of health care, but the following provides a useful framework for mapping successful change.

  • Actors
    • Many potential advocates and detractors lie in wait for potential health care innovations. "What's in it for me?" is a frequent question when it comes to change in health care. Every group of players has numerous subgroups - even sub-subgroups. A useful analysis here requires digging deep into each group's unique and varying anthropology.
  • Money
    • The ways of making money and acquiring capital in health care differ from those of most industries. Disassociations between consumers, providers and payers (and not just patients, doctors, and insurance companies) create market distortions that make traditional market assessments of limited value.
  • Timing
    • Market requirements, competition, and the health care market environment change over time. Meaningful changes in health care are frequently dependent on structural factors in the market, or antecedents like technology availability and adoption, regulations, even publicity and news.
  • Regulatory
    • Regulations are pervasive in health care. Successful innovation means navigating current regulations and gauging the likelihood of future regulatory changes. Additionally, the necessity for a Quality System can be a large and often unplanned for bite into an innovator's budget.
  • Customers
    • The relationship between who buys, pays and who benefits is fragmented in health care. Customers can be patients, referring physicians, hospitals - anyone who buys a product or service in health care.
  • Proofs
    • It used to be that big players in health care could drive innovation without really demonstrating clear benefits. These days unambiguous and quantifiable proofs are increasingly important. Soft benefits like "patient safety" or "increased nursing time at the bedside" are not the drivers they once were.  The marketing claims you want to make must be supported by Real World Data and/or Real World Evidence.

There are other models for innovation in health care (e.g., Disruptive Innovation, and Diffusion of Innovation), but these models tend to be retrospective, focusing on the traits of successful innovations and how they occurred. Neither of these models is well suited to gauging potential success or threading a path to market adoption.

Much of health care lacks transparency and has a multitude of intermediary relationships between those who buy, pay and benefit from certain transactions. The term "payor" is a good example of this fragmentation, where the patient doesn't buy their health care, intermediaries do. This innovation risk model can be applied to any geographic market. Even single payor health care systems have shifting intermediaries and are highly regulated.

So the next time you're planning a new product or service, try using this framework to create a model of market dynamics that will bolster your chances of success. Don't forget to dig deep and consider portions of the market that may lie outside your comfort zone.  And for both the new and the serial innovators out there, health care is different.

UPDATE:  Ursheet Parikh at the Mayfield Fund created a good blog post I recommend on the same general topic as this post, but from the venture capitalist perspective: 6 Reasons Why Digital Health Startups Will Fail.

Sources:

  1. Herzlinger, R.B., May 2006, Why Innovation in Health Care Is So Hard.  Harvard Business Review
  2. Christensen, Clayton M., Raynor, M.E., McDonald, R., December 2015, What Is Disruptive Innovation?, Harvard Business Review
  3. Use of Real-World Evidence to Support Regulatory Decision-Making for Medical Devices 1 Guidance for Industry and Food and Drug Administration Staff Document issued on August 31, 2017.
  4. Cain, M., Mittman, R., May 2002, Institute for the Future, Diffusion of Innovation in Health Care, Prepared for California HealthCare Foundation
  5. Ursheet, P., January 9, 2017, 6 Reasons Why Digital Startups Will Fail, Mayfield Blog