The Challenges of Innovation in The Age of Accountability

Presented by Jordan Dolin at the 2nd Annual CEO Roundtable on September 15, 2016

With the transition from volume to value and the various levers being employed to expedite it (i.e., reduced reimbursements, increased penalties), there has never been a greater need for health care innovation. Hospitals and health systems recognize the need for new solutions, but most still struggle to identify and implement them. And there is no shortage of new solutions coming from incubators and innovation centers. However, even though there is significant demand and supply, the process isn't working; inherent dynamics between the participants actually pushes them apart rather than bringing them together, resulting in a serious and expanding "innovation gap."

In this presentation, you will learn about the innovation ecosystem, the key participants and how their individual behaviors are preventing them from achieving their goals. You will also receive tactical and practical steps you can apply to your organizations' innovation efforts.

Transcript

1. Jordan Dolin, Emmi Solutions
2. Addressing the Broken Process of Health Care Innovation 2
3. Current State of Innovation • Never been a greater need for innovation in health care • Hospitals need new solutions; economics are unsustainable • Lots of entrepreneurs & incubators but no market traction • Massive disconnect between the participants • Strong evidence of both supply and demand, but… – Startups with great solutions are failing before launch – Hospitals are struggling with how to innovate – Abundance of investment dollars stymieing innovation Creating a significant and expanding “innovation gap” 3
4. The Basic Recipe for Innovation Three Entities in a Symbiotic, Mutually Dependent Ecosystem 4 C $ E Entrepreneurs Providing Innovation Customers Providing Demand Investors Providing Resources
5. Health Care’s Broken Ecosystem Market Forces are Driving the Participants Apart – Their Inherent Behaviors are Serving to Exacerbate the Problem 5 E C Opposing forces created a significant and expanding “Innovation Gap” $ Entrepreneurs Customers Investors
6. What are the Underlying Causes? Entrepreneurs: • Are prone to “innovating in a vacuum” • Lack access to funding and business acumen • End up building wrong or incomplete products Health Systems: • Are highly risk averse (and for good reason) • Don’t understand or are unable to embrace innovation • Not getting the solutions they need Investors: • Misunderstand health care (it’s not just biotech and device) • Looking for revolution vs. evolution • Have so much money, they can’t “afford” small rounds 6
7. Why is This Bad for All of Us? (above and beyond the impact on all of our day jobs) Entrepreneurs are failing: • So who is going to create the solutions that the industry needs? • Many never make it to market • Are the primary source of job creation in the US economy Customers: • Aren’t getting the solutions/products they need • Wasting their limited resources and making a tough situation worse Investors: • Frequently delivering or receiving sub-par returns • Making largest investment in companies that drive prices up 7
9. How Hard Can it be to Fix? • There are tons of startups creating new and novel solutions • And there is plenty of demand in the market • Why not just connect the innovators and customers? 9 Sources Of Innovation Customers Of Innovation
10. Because It’s Just Not That Simple • Multiple sources of innovation and multiple customers • Numerous intermediaries inserting themselves in the process • Any everybody is pursuing different agendas 10 Academic Institutions Innovation Labs Owned Incubator Tech Transfer Offices Individuals Pursuing a Need/Opportunity Based on Professional Experience Intrapreneurs Pursuing a Need/Opportunity Based on Professional Experience Innovation Sources (Provide Supply) External Organizations & Consulting Firms Paid to Help Customers Navigate Through This Resources Required by Entrepreneurs: Investors, Advisors/Board Members, Service Providers Independent Venture Backed Incubators Independent For Profit Independent For Profit Accelerators Industry or Domain Specific General Accelerators Association Owned Collaboration Centers Hospital Owned Membership Driven Association Owned Innovation Centers Hospital Owned Membership Based Market Places Captive (Controlled) Open (Independent) Intermediaries Attempting to Support the Process Hospitals & Systems Need new solutions to remain viable in the new world of healthcare Payers Need to demonstrate value and are offering new solutions as differentiation Always looking for innovation as an edge because they are in highly competitive markets Pharma & Device Innovation Buyers (Provide Demand)
11. The Model is Fundamentally Flawed • There is little, if any, alignment between the majority of participants • This is because they are all pursing their own agendas • For most intermediaries, it’s more profitable to maintain the chaos • But time is the enemy of the suppliers and consumers of innovation • Need a new model that focuses on achieving a common objective • Need a new model that rewards achieving a common objective This will require changing both the mindset and process 11
12. Organizations Need to Think Differently The industry needs to focus on fixing the innovation gap and the only viable, sustainable solution is to change the ecosystem. • With philosophical & economic alignment around a shared vision • Innovation revolves around solving actual problems not maximizing profits • Where the success of one participant isn’t at the expense of another • The product ROI is as important as the financial returns • And profits are shared based on the value added by each participant Because none of us are as smart as all of us. 12
13. Organizations Need to Act Differently If your organization wants to be more innovative, they need to commit to it and strive to make it a core competence. • Recognize it’s a culture shift and it starts at the top of the organization • Foster the proper environment – no silos, no gatekeepers, no ego • Understand why you are doing it and what constitutes success • Define a process and reward the behaviors you want to drive • Focus on the needs of your customers (they are why you exist) • Accept that great ideas can come from anywhere • Create a lens to assess the viability of different ideas/solutions • Embrace failure, it’s part of the process, learn from it and move on 13
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