What if Healthcare is Already Fixed?
Everything in strategy is very simple. You just have to discover what works, and then scale it.
But simple doesn’t mean easy.
Innovation theater dominates the news feed. There’s an infinite cascade of cool-tech gadgets, newly-minted software, workflow engines, artificial intelligence machines, digital technologies, robotics, virtual realities and service-oriented architectures. Each re-fresh brings another wave of the next frontier.
All technology has data showing potential to improve a piece of the health experience: patient engagement, care delivery, medication adherence, revenue cycle management, content marketing, population health management, and of course data access, aggregation and sense-making. The latter especially to monetize the cloud of ‘smart dust’ mushrooming around each one of us whenever we interact with the technosphere. Which is always.
In other words, everything works. And that’s part of the disorientation.
The Digitally Dizzy
A distinct hallmark of our time are the illusions that health technologies inspire.
Technology is a natural system, an extension of biological evolution. More often than not, its promise is driven by the speculation of the sellers, not the buyers.
Its execution is shaped by a linear set of assumptions and decisions, all bounded in a narrow operational (versus strategic) construct. The technology roadmap often excludes a crucial interaction with complexity and business objectives: people and their behavior change.
It’s a functional approach that consistently fails to deliver against expectations. Or it delivers the exact opposite effect.
These are the unintended consequences. Actual results are completely different than, or counterproductive to, what was planned when the technology vision was conceived and rolled out. Here are three recent examples, offered purely as a point of access to the idea:
- Sleep tracking apps and devices that actually cause people to lose sleep (sleep tracking is part of a market idea based on the belief that people really want to meticulously track their carbs, or calories, or steps, or whatever. In 2015, the quantify-yourself market was worth an estimated $123 billion, a figure expected by some analysts to grow to $612 billion by 2024). A new paper, published last month in the journal Sleep Medicine, links sleep-tracking apps to more sleep problems, perhaps because of the way they tend to increase sleep-related anxiety.
- Electronic health records fueling administrative burden and physician burnout. According to Steve Strongwater, a rheumatologist who is the CEO for Atrius Health in Boston, about 80% of physican burnout is due to workflow issues. As it turns out, the way the electronic medical records have evolved — unlike in other industries, where automation has made work easier — the electronic medical records have actually added more work, blocked the flow of information, and taken time away from patient care (see the full interview between Steve and Tom Lee, a member of the editorial board of The New England Journal of Medicine, here in NEJM Catalyst: “Are EMRs to Blame for Physician Burnout?”).
- Medication adherence technologies that don’t improve adherence. In a year-long study of 1,500 heart failure patients published in JAMA last month, there was no difference in hospital readmissions, mortality, or medical costs when a ‘connected health’ intervention was compared to placebo. And this was a fairly robust vision for “connectivity” — it included connected pill bottles, daily lottery incentives that paid up to $50 for taking medications on time, and the option of enlisting friends or family to be informed if the data from the pill bottle showed they skipped a dose.
Andrew Russell is a professor of history and the dean of arts and sciences at SUNY Polytechnic Institute. In an editorial last week in the New York Times, he writes that when Americans talk about technology, they often use “innovation” as a shorthand. “But innovation refers only to the very early phases of technological development and use,” he says, and the I Word “tends to narrow the scope to digital gadgets of recent vintage: iPhones, social media apps and so on.”
Technology is a commodity input, more like electricity: always around us, always on, and subterranean. And as it becomes cheaper, more powerful, more plentiful and easily accessible to anyone with a computer, the value of spending heavily on islands of functionality makes little sense.
Instead, the strategic potential — the transformational opportunities — comes from the space it opens to reposition competitors, design new industry ecosystems, and reframe business.
Ben Thompson describes the ethos well in a recent blog:
“Apple’s goal was not to build a phone, but to build an even more personal computer; their strategy was not to add on technological functionality to a phone, but to reduce the phone to an app; and their tactics were not to duplicate the carriers, but to leverage their connection with the customers to gain concessions from them.”
In other words, technology enables a new logic of value creation. The value is generative. It’s expressed in the ability to dissolve boundaries, create new identities, remove friction and re-configure entire business systems.
The map changes the landscape. Or to put it another way, the “transformational” remit for today’s health market leaders is the ability to creatively explore and conceptualize a new territory, assemble the intellectual viewpoint, and then design the new industry infrastructure — the nervous system — to own the space.
Winners are those who can move laterally the fastest.
The objective is to write new rules by which others have to play. Cue the entrance of Amazon…”Amazon is showing interest in health care, and it’s making industry players ‘nervous,’ “
Stuck in a Time Warp
Hippocrates was a systems thinker. In the fifth century B.C., he argued that a person’s health was inseparable from the health of society. He understood “health” to include nutrition, exercise and even exposure to the arts, all of which needed support by society, and thus medicine necessarily intersected with politics.
Hippocrates also understood about organizing around outcomes.
His trail of thought and intention — nutrition + exercise + policy innovation = health — was reflected more than 2500 years later, in 2001. This is when David Satcher, MD, the Surgeon General at the time, issued a “Call to Action” to prevent and decrease the prevalence of obesity in the United States before the end of the coming decade.
When the Surgeon General issued his report, Mississippi was the only state in the country with an obesity rate of between 25–29 percent of all adults (Mississippi now has the third highest adult obesity rate in the nation, currently 35.5 percent).
As it turns out, 2001 was the same year researchers at Georgia Tech Research Corp. and SensaTex Inc. invented one of the first wearables. Made of a soft, washable fabric with optical and electrical fibers woven into it, the “SmartShirt” recorded heart and respiration rates, body temperature and calories burned. Data could be captured and relayed wirelessly to doctors or personal trainers.
Time Magazine bestowed the SmartShirt as one of its best inventions of 2001. SensaTex was going to sell it for $175, only slightly more than the Fitbit Blaze currently goes for on Amazon. (Of note is the quarterly revenue FitBit reported in August of 2017, nearly two decades after SmartShirt; FitBit is now in a ‘transition year’, struggling to compete on a functional story for its technology.)
Around this time, Xenical had been approved by the FDA for obesity management in conjunction with a reduced caloric diet. Xenical was marketed by Roche with a companion patient support and adherence program (Xenicare) that, in one study was shown “to significantly improve the levels of weight loss achieved and increase patient satisfaction and compliance with treatment.”
(In 2001, sales for Xenical reached $600 million — not bad, but not blockbuster status. Unfortunately, that also marked the peak for the drug. By 2004, sales were down to $464 million, and GlaxoSmithKline bought the rights to sell the drug over-the-counter in the U.S. under the brand name Alli.)
It would be interesting to explore the emergence of value from linking FitBit and Alli. More on collaborative business model innovation here.
Becoming ‘Consumer-Centric’ in 2004
In April 2004, President Bush laid out a plan to change things: he wanted to make healthcare more “consumer centric” and improve its quality and efficiency. The President’s plan was based on the following tenets, a view of the possible shaped by the potential of technology:
- Medical information will follow consumers so that they are at the center of their own care
- Consumers will be able to choose physicians and hospitals based on clinical performance results made available to them
- Clinicians will have a patient’s complete medical history, computerized ordering systems, and electronic reminders
- Quality initiatives will measure performance and drive quality-based competition in the industry
He also called for widespread adoption of electronic health records in 10 years, doubling funding to $100 million for demonstration projects on healthcare IT, and creating a new sub-Cabinet position of National Health Information Coordinator. (Here’s some of the coverage in HealthcareITNews.)
By the end of the year, eight states (Texas, Louisiana, Arkansas, Alabama, Tennessee, Kentucky, West Virginia, and Michigan) joined Mississippi in the top tier of obesity prevalence, with adult obesity rates north of 25 percent of the state’s population. Nearly 66% of U.S. adults were overweight or obese.
“Transformational Potential of Technology” in 2006–2007
In 2006, U.S. health care spending increased 6.7 percent to $2.1 trillion, or $7,026 per person (data point here). About one-fourth of U.S. physician practices were then using an EHR, according to the results of high-quality surveys. There was also “substantial data suggesting that health information technology (IT) in general and electronic health records (EHRs) in particular have the potential to transform the quality of care while controlling health care costs.”
Which is true. Theoretically.
Indeed, the assumed connection between IT and business strategy has become so ingrained in the taxonomy of our thinking that we now take it for granted. But as Nicholas Carr framed things in 2003 in his seminal, provocative article in Harvard Business Review, “IT Doesn’t Matter”:
“Behind such rhetoric lies one simple assumption: that as IT’s power and ubiquity have increased, so too has its strategic importance. It’s a reasonable assumption, even an intuitive one. But it’s mistaken. What makes a business resource truly strategic — what gives it the capacity to be the basis for a sustained competitive advantage — is not ubiquity but scarcity. “
[A 2013 study by RAND, sponsored by the American Medical Association and the online network AmericanEHR Partners, found that 43 percent of physicians thought their software actually made their jobs more difficult. Doctors are investing the time to input data, but their offices are still having to fax and mail records like they did a decade ago. Less than 10 percent of hospitals say they’ve been able to trade records entirely through their digital systems.]
There was a transformation in health taking place in 2006, although it was of the wrong kind: almost half of states now had an adult obesity rate of between 25–29 percent of the state’s population.
On January 9, 2007, Steve Jobs announced the iPhone at the Macworld convention, receiving substantial media attention, as well as criticism (Then Microsoft chief executive Steve Ballmer’s comments on the iPhone would come back to haunt him. He predicted that it would be a niche product and that Microsoft would dominate the smartphone.)
On June 29, 2007, the first iPhone was released, ushering in an entire industry to support the use of mobile health technology.
New digital trackers and connected sensors are now released every month; a quarter of a million health-related smartphone apps are available for download today, although most people (65 percent) aren’t downloading any new apps at all.
App fatigue is real.
There was certainly a fundamental shift taking place in the infrastructure of healthcare in 2007. The problem is that it wasn’t matched by a similar shift in strategic thinking about the nature of value, competitive advantage and business model innovation that the new infrastructure technology enabled.
Said differently, technology was being applied to help ‘where the industry is’ rather than ‘where it needed to go.’
The prevalence of states with more than 30 percent of adults with obesity expanded even more. By the end of 2007, 49 states had obesity rates of more than 20 percent of the state’s population.
Improving Outcomes in 2008: The Triple Aim
Health happens at a system level. It’s never just one thing in isolation, but many things simultaneously and interactively.
Donald M. Berwick was President and Chief Executive Officer of the Institute for Healthcare Improvement (IHI) in 2008, when he published The Triple Aim in Health Affairs. It was a vision for how to improve the U.S. health care system (any healthcare system, actually), organized around the simultaneous pursuit of three aims:
- improving the experience of care,
- improving the health of populations, and
- reducing per capita costs of health care.
Preconditions for this included the enrollment of an identified population, a commitment to universality for its members, and the existence of an organization (an “integrator”) that accepts responsibility for all three aims for that population.
The integrator’s role includes at least five components: partnership with individuals and families, redesign of primary care, population health management, financial management, and macro system integration.
In other words, Berwick was calling for someone to assume total system leadership.
Outcomes would come by focusing less on technological transformation, and more on managing a system as a whole. Maintenance now becomes a strategic imperative. (Even Netflix and Amazon — the kings of “disruption — keep their customers happy only through reliable and well-maintained data and distribution networks.)
In 2008, six states had adult obesity rates higher than 30 percent of the state’s population.
Medical costs related to obesity in the United States alone were estimated to be $147 billion a year in 2009. In the same year, the American Heart Association reported that soft drinks and sugar sweetened beverages are the largest contributors of added sugars in Americans’ diets.
It would take another 7 years before a policy innovation — the first tax on sugary soft drinks — would be passed. Berkeley’s tax of 1 cent/oz of sugary drink took effect on the first of January 2015 (the city has seen a decline in soda consumption by more than 20 percent). Philadelphia’s tax of 1.5 cents/oz took effect on January 1, 2017.
Apple and Amazon Are Infrastructure Technologies
Competing on health outcomes is less a question of technical barriers. It is now possible to design evidence-based care systems that deliver a trifecta at once: convenience, trust, and price. The challenge is creating a singular entity from the near-constant fragmentation caused by the fragmenting dynamic of modern life.
Digital transformation is an operational construct. A strategic transformation works with new assumptions about value, identity and competition. As Don Berwick described it nearly a decade ago:
“The remaining barriers are not technical; they are political. The superiority of the possible end state is no longer scientifically debatable. The pain of the transition state — the disruption of institutions, forms, habits, beliefs, and income streams in the status quo — is what denies us, so far, the enormous gains on components of the Triple Aim that integrated care could offer.”
Ultimately, those most successful to capture a slice of the trillion-dollar shift to health performance and value-based reimbursement will be the ones who can harness Apple or Amazon as infrastructure technologies, and through them design a unique, consumer-grade health experience. The infrastructural technology itself is incidental to decision-making; its maintenance is the new innovation.
More on making the magic leap to new value here.
In a published review of the potential for mHealth, a team of researchers looked at data collected from 69 studies published between 2004 and 2014 on six health behaviors that affect cardiovascular health in adults. The researchers said “[their] findings showed that weight loss, exercise and quitting smoking are the three areas that show the most promise of actual improvements due to the use of digital technologies.”
Not surprisingly, there has been an explosion of digital health startups. The market is expected to reach $233.3 billion by 2020, with the primary driver coming from the mobile health market to help people with nutrition and exercise.
Hippocrates would be happy.