jasmine pennic | hit consultant | 17 september 2015
Is healthcare innovation broken?
According to a recent global survey of seniors executives conducted by PA Consulting Group, much of the healthcare industry’s problem with innovation comes down to internal, structural resistance to change. Despite these obstacles, the healthcare leaders assert there is no shortage of good ideas in their organizations.
Barriers/Challenges to Healthcare Innovation
Healthcare senior executives identified the following four biggest challenges to healthcare innovation in the survey:
Bureaucracy and red tape
The survey found the biggest barrier to innovation was too many rules and regulations. Dr Keith McNeil, Chief Executive Officer of Cambridge University Hospitals, stresses that bureaucracy and innovation do not mix. “You would almost think they had deliberately set up the system to stop innovation from happening,” he says.
Cost saving trumps the greater good
When healthcare organisations measure innovation, their principal metric is cost saving (87%). This is higher than the number that measure innovation by its ability to improve patients’ lives (84%). “Most people understand we are trying to do something for the benefit of people,” says Dr Basil Matta, Divisional Director of Emergency and Perioperative Care at Addenbrooke’s Hospital. “The reluctance to adopt is not necessarily about risk aversion. It is about making sure people understand that they may be missing a real opportunity by not understanding the benefit of the innovation being introduced.”
Despite a high percentage of healthcare survey respondents indicating they have the right mix of skills to make innovation happen, many still fall short on some of the skills they most need to accept the longer-term potential of innovation. In our survey, almost half (43%) say they are weak on strategic foresight and future planning and thinking. One-third (33%) say they do not have the skills they need in customer insight and intelligence.
“With innovation, where you start and where you end up are usually very different places,” says Dr Keith McNeil, Chief Executive Officer of Cambridge University Hospitals. “If you focus too much on ROI up front, you stifle creativity. It is only when people come up with ideas that look good and have promise that you should start putting rigor around the ROI.”
Inconsistent support and lack of ongoing investment
For change to take hold across an established system, everyone needs to get behind it. In healthcare, 57% say some people spend a great deal of time on innovation, whereas others do not. This unevenness is the highest among all sectors in our survey.
How organisations can stop wasting their best ideas
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Opportunities to Create A Culture of Healthcare Innovation
Becoming innovative usually requires significant cultural and behavioral changes. To create a culture of innovation in healthcare, one that is confident with risk-taking and learns quickly from failure, healthcare organizations must focus on the following five areas:
Allow freedom to experiment
Employees should be encouraged to spend time developing innovations that will help the system provide better care and deliver more effective treatment. In our survey, just 21% of healthcare respondents say they allow ‘innovation time’ – the second lowest among all sectors.
This compares markedly with life sciences companies, of which 55% allow innovation time, and private defense companies, of which 43% follow this approach. Two in five (40%) say overzealous risk management hinders innovation in their organization.
Too many rules, and a risk averse culture focused on justifying costs up front, will dissuade people from sharing and experimenting with potentially brilliant ideas. Healthcare organizations need to change their business models to focus less on utilization and procedures, and more on rewarding innovation.
Give guidance before prohibition
While people should be encouraged to experiment with a wide range of ideas, management should put aside time to review and direct innovation activity when it gets to a stage of relative maturity. This will ensure the innovation is pursued appropriately, through the right channels. It will also prevent people from wasting time on ideas that are not ready to be scaled up.
Seek additional advice on cost forecasting
When ideas fail for avoidable reasons, the single largest cause cited by healthcare respondents is lack of resources (42%). At present, many healthcare organizations do not involve their future financial backers, whether commissioners or venture funds, in the initial cost-forecasting stage for approved innovations. Doing so, they risk miscalculating the total cost of change. In the US, integrated healthcare companies – which include both payers and providers– are frequently the most innovative.
Look to manufacturing to move faster
Even for innovations where a commercial application has been agreed, it can typically still take up to five years for the final product to be realized. One industry that healthcare can learn from here is manufacturing.
Set bold ambitions from the top
To drive health advances on a large scale, the whole organization must be engaged. Traditionally in healthcare, the ‘big picture’ strategic goals are frequently not expressed in consistent terms from senior management down. The result is that the organization as a whole does not move together towards innovation on a large scale.