Innovation in Healthcare

There has been a fundamental shift in the focal point of innovation in healthcare. Historically, innovation has been driven by the advancement of technology. The escalation of mass production, and the chemical revolution post World War II brought a number of improvements to healthcare, including inexpensive and effective antibiotics. In the 1960s, the information technology revolution began, and this gradually digitalized healthcare over the next 40 years. From CT scanners, to imaging guidance and robotics for interventions, advances in technology usually created an apparent and immediate need for providers to acquire and implement the advancement to remain current and competitive. In this way, providers reacted to a seemingly unending stream of new options provided by industry by consuming technology-based innovation in bulk. As time passed, costs increased, but they were passed along to employers, insurance companies, and the government.

Today, healthcare providers in the developed world are faced with an ultimatum; choose to reduce cost now, or wait and be forced to reduce cost or worse. Consequently, the focal point of innovation in healthcare has shifted, from technology advancement, to process improvement. The meaningful innovations in healthcare today are not produced by suppliers and reactively adopted by providers. Instead, providers are originating care delivery, process improvement, and risk management innovations, and engaging strategic suppliers to determine their ability to support process innovation.

For example, providers are transforming the way populations receive healthcare, with old technology like telephony, and remote monitoring using basic internet networks. Providers are innovating how disease states are managed in multiple care-settings, to maximize the efficient utilization of non-acute and acute care resources. This is done across a region by implementing clinical protocols and metrics that touch primary care and specialist providers. Other innovations are ensuring that care can be delivered in a satisfying and engaging way for patients, like using free internet video conferencing software to connect with a care manager at the E.D. if a child is experiencing a potential medical crisis. The management of chronic diseases to avoid expensive services utilization has spurred innovation where providers are managing clinical risk, and financial risk at the same time, while improving outcomes and satisfaction. A variety of provider processes are changing, and these new workflows are increasing the need for different, and sometimes standard equipment and technology.

This shift from supplier innovation to provider driven innovation coincided with the beginning of the global financial crisis, which caused many health systems to immediately reduce spending, and increase value analysis and increase the scrutiny of purchasing decisions. The transformation of U.S. healthcare in another transition, this time from volume based incentives to value based incentives, simply accelerated the shift in innovation.

As supply chain managers, ensuring that high value relationships and supplier portfolios are maintained is job 1. The enterprise risk management done by supply chain is substantial. In the coming years, it is reasonable to expect that more will be required, and enlightened managers can look toward options where challenges for providers and suppliers can be solved uniquely. In this way, supply chain management processes will be innovated.

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By:
Gunter F. Wessels, Ph.D., M.B.A.
Total Innovation Group Inc., Practice Principal, Partner
and
Sam O’Rear
Total Innovation Group Inc., Senior Partner