Is Innovation a “Dirty Word” in Healthcare? Perhaps, but it’s the Holy Grail for Retail.

Last week I attended the Prime Health (www.primehealthco.com) event in Denver to garnish a deeper understanding of what healthcare innovators are doing to transform an industry that’s going through neurosis. As I engaged with many start-ups and scale-ups, I found myself hearing familiar conversations that I hear inside the association I work for.The type of collaboration taking place in the healthcare system is not unlike what I hear inside GMDC’s ecosystem. If there is one truth today that businesses are facing, it is…

Consumer behavior and experience is transforming how companies view their business — those who are reshaping their core purpose will be the survivors.

Prime Health is a growing business of collaborators, similar to GMDC, but focused on building the nation’s leading digital health cluster. When I speak with retail, supply and service company executives inside the GMDC ecosystem, I hear how disruption is changing everything. The healthcare system is parallel with today’s consumer-facing companies. There’s little difference left within industries where disruption is not impacting. Disruption has some businesses concerned, while others are optimistic about the future simply because of the “dirty word”: innovation.

Whether a company is trying to put a product on the shelf, or create a gadget that assists with a patient’s chronic condition, innovation is something that has forever altered human behavior, changed an outlook, and set new expectations.

Innovation is not what you think it is.

It’s not about incremental change. It’s not even about inventions. It’s about the entire experience.

Innovation causes businesses to realize that next practices, both in thinking and structure, make growth or change reliable. And it’s reliable growth today that is the only sustainable method showing real top line leaps of gross margin in today’s economy. Companies that are producing that kind of innovation know that being innovative is not a strategy itself, but a result of a successful strategy.

Innovation exists in a context where complexity is high and the unpredictable occurs far more frequently than predictable. In response to a rapidly changing business environment, new technologies and emerging markets tend to favor downstream innovation, instead of upstream (more on that topic later, keep reading). In fact, 72% of all innovation comes from a complete business model change, not from the introduction of a hot product or service.

That’s exactly what I see happening in the healthcare world right now. It’s taken 30 years to get to this point, but the system is finally being turned on its head and forced to think differently because of new government regulations, namely ACA, while many existing in the system are still fighting to adapt and adopt. Which leads us to the next question…

What way of thinking in your organization will get you unstuck in order to create your roadway of innovation?

If your customer cannot feel innovation, chances are the mindset of those managing innovation in your company are not experimenting and failing enough. Consumers need to feel a clear difference between an incremental change with your product or service vs. something that is truly innovative.

Innovation can be a conundrum within traditional business models, and that’s OK, it should be. It doesn’t come easy, in fact there are 152 defined processes that make innovation happen (Innovators Equation). With so many methodologies that can be used to achieve innovation, not one is more successful than the other. Indeed, it’s all about empowerment, discovery, and having multi-generational associates speaking the same way about it. It’s a culture, not a committee.

The key to starting the innovation conversation inside an organization, is to not have the innovation conversation first. Companies must start with problem-solving for the customer first. In order to get to that point, the strategy needs to go from population to personalization.

Once that’s figured out, what’s next?

Go upstream or downstream. But know what works.

Patrick Spear, GMDC president/CEO spoke at a business session during the Prime Health conference and outlined what innovation is from the perspective of a retailer. While the healthcare industry today is built entirely on a “monument platform” (you go to a hospital or clinic when you’re unhealthy), and not a “movement platform” (the consumer is compelled to be healthy, therefore they seek ways to reduce frequency to the doctor), it will be radically changed in the near future. The disruption Patrick spoke about is predicated on the healthcare system waiting for the patient to engage, instead of the system engaging with the patient. What the healthcare system could be doing, and what it is doing, shows an immense delta.

With retailers poised to talk to their shoppers as patients instead of consumers, and providers looking at their patients as consumers, the conditions are perfect for downstream innovation.

The worldview according to GMDC, is that healthcare is becoming selfcare. With 20% YOY rising costs in healthcare benefits since Obamacare was introduced, selfcare is inevitable. Downstream innovation, starting at the top with the payer/provider, is prime and untapped opportunity. As a consumer takes more control over their own health and wellness, hospitals are trying to cut costs as care becomes more expensive. The natural way to remove cost is to spread the responsibility of care down the stream of where the patient is shopping for care. As a result, not only will that drive opportunity for new products being offered at retail, but it can cause providers and payers to finally start looking over the fence and consider strategic alliances and partnerships. An enlarged perspective of the healthcare chain can only produce a win-win for everyone involved.

With 65% of prescribed medications not being used properly, and 30% of Rx requests never filled, the wasted costs alone in today’s healthcare system are enough evidence to show that the current model is in need for transformation. Doctors are pointing the finger at their patients who are not picking up their prescriptions, while the rest of the healthcare system is too good at trying to remedy a problem by cutting costs and not realize the effects they are having on the consumer. That’s why downstream innovation makes sense.

Persuade people when they are persuadable.

It’s as easy as that. But it hasn’t always been that way. Only recently have retailers started telling their shoppers about holistic solutions that can make their life easier. Doctors are still trying to understand that. Generally, health and wellness products are designed to make doctors’ lives easier, and are less patient-centric. Medical technology has always  been about making doctors’ time more productive. The consumer is waking up to this reality and rising to the occasion. Retailers are giving them what they want, first, and offering more care products that normally would be available at a clinic. Some retailers are growing their footprint and expanding their own clinics inside their stores.

That kind of orientation of the industry will drastically accelerate over the next 3-5 years. The passive sell of health and wellness products has become active.  As the physician is losing power, and consumers are migrating healthcare from the hospital towards the suburbs, the retail environment is changing.

As shoppers become more mobile than ever, the ability to engage with them is increasingly available and at the same time increasingly difficult because of their short attention span. Learn how to capture it because the time to begin engaging with consumers from the top to the bottom of the value chain of health and wellness, is now.

With that, this summer, GMDC will be launching its first research in a series of what it means for the consumer to take back control of their own health and wellness, starting with HOME HEALTH.

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