HIMSS 2014: The State of Innovation in Healthcare IT

Health IT is expected to top $34.5B, yet despite pressure to innovate, the industry is quite behind in disruptive innovation. Instead what we are seeing is attempts to improve efficiencies, which while valuable have no immediate or discernible impact on the industry. This was the inherent conflict we saw at HIMSS 2014 in February–the industry is aware of the need to innovate but is struggling to find a path to doing so.

The case for disruptive innovation in healthcare

Staggering waste: The US health care system wastes more than $765 billion each year – that’s 30 percent of all health care spending. If we could find efficiencies that could eliminate 100 percent of this waste, over the next ten years we could reduce nearly 50 percent of the national debt. That was the perspective of Aetna CEO Mark Bertolini’s opening keynote. This staggering waste is one of the biggest rationales to explore innovations.

Rising costs: At the same time, healthcare costs have risen to be a stunning 17.5% of our GDP and increasing at a rate of 4x the rate of inflation. This was the topic that framed the discussion at the invitation-only Health Transformation Project. Republican and former Governor of Mississippi Haley Barbour, and one of the architects of Obama Care, former deputy chief of Staff for the President, Nancy Ann De Parle graciously debated the merits of Obama Care (PPACA) as a reaction to the healthcare cost problem. The two debated mostly around the merits of federal vs. state solutions to the problems but there was perhaps a surprising level of agreement that change was needed.

Government mandate to align to outcomes: Amongst the biggest challenges ahead comes directly from the affordable care act, which has defined a completely different business relationship between payers, providers and patients, in the form of Accountable Care Organizations (ACOs). The effect of this is that providers only get paid for high quality patient outcomes not for the volume of patients seen or number of procedures approved. Aligning the incentives of patients, payers and providers is great news for all of us in the long term, but it’s going to be a rocky and challenging transition for everyone in this industry.

The only way to minimize waste, control costs and align outcomes is to rethink healthcare IT. That was the key point of former Secretary of State, Hillary Clinton’s keynote. She argued that while this decade will prove to be perhaps the most challenging ever in the healthcare industry, it provides us with the opportunity to build the IT infrastructure needed to both eliminate waste and deliver better healthcare outcomes.

A thorny path to disruptive innovation in healthcare

While innovation permeated HIMSS 2014 as a key theme in every talk and exhibit, the path to actually implementing it is far from smooth and clear. Some challenges are more valid than others. Some are also easier to acknowledge and address:

Different perceptions of the nature of innovation: Research done by HIMSS Innovation Community suggests that 65% of healthcare providers considered that cost reduction was their top innovation priority. In the same research study only 20% of providers have a clear definition of what innovation means relative to the goals of their organization, and 67% have innovation budgets of under $2 million a year, with almost a third spending less than $100,000.00. For some organizations with hundreds of millions even billions of dollars in revenue these are incredibly low numbers.

Attending a special meeting of the Innovation special interest group at HIMSS, I was surprised to find the discussion dominated by process improvement methodologies, like Six Sigma, Total quality management, Agile development, etc. These “brands” and philosophies are in many ways all focused on incremental improvements in reliability, risk management, cost reduction, efficiency and perhaps only barely fit into the definition of sustaining innovation that I’ve had since reading Clayton Christensen’s Innovators Dilemma many years ago.

Don’t get me wrong I don’t want to cast aspersions on the validity of that work much of it is needed but much of these techniques are focused on what is commonly referred to in healthcare as “bending the cost curve down.” Finding operational efficiencies is only half the story, there also needs to be significant innovation in what I’d refer to as “bending the revenue curve up” and with this approach requires a wholly different approach looking for disruptive innovations with methodologies like design thinking.

Traditional vendors are candidates for the Darwin awards. As I walked the enormous show floor, getting demo after demo of the latest Meaningful Use 2 EMR systems and various other Health IT solutions, it was hard to escape the feeling that none of them were doing anything really disruptive and new. Everything I saw felt pretty dated, ill thought-out, barely working, oblivious to the user, ignorant of the most basic design principles and insular from the best practices and rapid innovation of the consumer tech sector. I’ve not had such a palpable feeling of “so much low hanging fruit” in many years.

These huge vendors have no excuse for not investing in radical and disruptive innovation and great user experience design. They need to do allot more to address the basic usability and effectiveness of their systems. The lack of innovation visible on the show floor felt suspiciously like an IT industry that may have become complacent with the status quo, almost ready to receive their own Darwin awards. And if they do not start changing themselves, I would not be surprised if they get it.

Drowning in an ocean of change. Finally, perhaps directly because of these innovation mandates and changes from the federal government (the largest buyer of healthcare services) the natural appetite of this industry for disruptive innovation has perhaps understandably been dulled. In the sea of changes healthcare providers must enact and incorporate, thinking about what else they should be doing could be overwhelming. Healthcare providers in my book deserve our support and respect for just keeping up with the incredible pace of change demanded by ICD10, Meaningful use stage 2 and 3, accountable care organizations etc.

Disruptive innovation: one step at a time

Despite the overall bleak and confused approach to innovation, there were rays of hope at HIMSS 2014 that indicate that as challenging as innovation is, there are passionate healthcare providers that have embarked on the journey. At the Healthcare Innovation Symposium we heard about physician entrepreneurs like Dr. Lyle Berkowitz, Chief Medical officer of innovation at Northwestern Medicine, and hospitals building their own innovation departments like the KP Innovation Consultancy, led by Chris McCarthy. New innovation labs are springing up like the UCSF Center for Digital Health Innovation that is supported by Samsung. Large healthcare organizations like Aetna are building incubation programs and acquiring heath startups to accelerate the pace of innovation.

And that is one of the biggest “a-ha” moments for me from HIMSS 2014 – healthcare innovation is not only inevitable because it is mandated, but it is something that patients and clinicians are desperate for. It is up to us as innovators, designers and solution providers to teach the industry how to reinvent itself and, along the way, find a way to better health outcomes and higher profitability.

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Rob Girling