David Schmidt

David Schmidt, a Managed Healthcare Executive editorial advisor, is president of the TPG International Health Academy, which hosts trade/study missions around the world for U.S. healthcare executives. He also provides strategic consulting to health plans 

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Innovation: new idea, creative thought, new imaginings in the form of device or method.

I believe we all can agree that the quagmire that is the U.S. health system in 2019 cries out for innovation in all ways. The question becomes: how does a highly regulated, risk-adverse, complicated, multifaceted system encourage innovation? I don’t think it does-but that doesn’t mean those of us who make our living in the system should throw up our hands and give up. We need solutions, innovative ones both large and small. How do we get them?

Four Ways to Spur Innovation at Your Managed Care Organization

Like nearly every problem in life, there isn’t a magic bullet-but there are pathways to success. Other industries have completely changed their business models, their methods of reimbursement, everything. We can too.

In a prior life, I worked for a large manufacturing company. Our largest customer came to us and said: “You will lower your price by 20%, you will provide us with your process quality data. But at the end of the day we will give you three times as much volume, you’ll make more EBITDA, and your return on assets will go up.” Our first reaction was “You’re completely insane.” But they were our largest customer, so, we provided them with the data, which we had to figure out how to capture. Once we figured that out, we were able to use that quality data to dramatically improve our process-we reduced waste by nearly 20%. Everything they said came true-three times volume and nearly four times margin. What’s the point for healthcare? Maybe if we rethink our processes we can find better quality, better outcomes, and maybe make a bit more margin. 

While a dramatic, completely new innovation is fabulous-antibiotics, anesthesia, shared risk arrangements come to mind. We can’t all be that creative, but we can all find new pathways. We need to study other industries and processes. Where did surgical checklists come from? Airplane pilots. What other solutions can be modified and tweaked and make a difference in healthcare? I’m certain there are a tremendous amount of processes, systems, and technology solutions that can be adapted to healthcare, but we have to look for them and be open to considering non-healthcare ideas. We do have to adapt them to our world-that’s one form of innovation. 

I’ve visited and studied health systems in a number of countries-I don’t think any of them have all or even most of the answers but they, in most cases, get better results in many key measures. Maybe if we look at what they do we can find an “innovation” for our system. Social determinants are an area we are finally considering. Those factors influence outcomes everywhere. Has any system made more progress in childhood nutrition, maternal health, or any of a number of other conditions impacted by these factors? My guess is yes. Can we use exactly what they do? Probably not. But can we modify their approach to fit our parameters? I bet we can. That’s a form of innovation.

A question we should ask ourselves-how do we compensate our staff for innovation-do we incentivize it or does our compensation system incentivize limiting risk? If we have an Innovation unit, to whom does it report, how are its ideas disseminated? I believe most of our organizations aren’t structured to encourage adoption of innovation. Let’s make this issue the first one solved with an “innovation”-new incentives.

Finally, I think we find innovation by asking why and what-not why not.  Let’s make 2019 the year of innovation.

, which hosts trade/study missions around the world for U.S. healthcare executives. He also provides strategic consulting to health plans and health systems.

Articles

It’s obvious that the healthcare system is due for some major innovations, but are we looking for them in the right places?

Why It’s Time to Rethink Healthcare Innovation

	Healthcare in the United States is no longer focused primarily on care provided at the point-of-service. It now requires a broader perspective, such as a focus on health promotion, population health and individualized approaches. The main goal: Improve health outcomes.

SchmidtThis issue’s cover story focuses on “Health Plans of the Future,” and how plans need to change their priorities to keep up with the changing industry. An important part of this discussion, however, must include 

 the major healthcare players-providers, health systems, health plans, and consumers-and focus on how all must work together to improve the quality of the U.S. healthcare system.

	To achieve a future where health outcomes are paramount, we need to stop concentrating on aspects of the system that have nominal impact and start implementing key drivers of improved outcomes. For example, focusing on the administrative costs associated with health insurance (not insignificant but not a driver of long-term outcome improvement), or interstate sale of health insurance (de minimis impact at best), will not dramatically impact the cost curve or the outcomes of care.

	In addition, a dialogue about the drivers of cost in the current system must be considered.  Oligopolies in delivery, pharmaceuticals, and devices are key factors in the cost discrepancies between the U.S. and other developed countries. While healthcare spending in the U.S. far exceeds other high-income countries, health outcomes are lagging, according to a 2015 analysis by 

	But there are pockets of innovation that can be the leading edge of transforming the U.S. system.  Some of these include:

			A growing emphasis on pay for outcome rather than pay for service.

			The public-private partnership of Medicare Advantage-a process where government sets goals, but private companies compete for membership and use different techniques to control outcomes and cost.

			The changing culture and training of providers that looks more to root cause and long-term outcomes.

			A shifting focus from hospital-based care to care provided in alternate settings-addressing palliative care needs and end-of-life issues.

			A growing emphasis on “whole person” care integrated with mental and physical health.

	Some of the factors that may contribute to progress include:

			Technology gains in many areas, such as patient monitoring and surgical procedures, that lead to better outcomes and lower costs.

			Greater understanding of genomics leading to more personalized and hopefully, cost-effective treatments.

			Continued gains in understanding brain function and its effect on health status.

			Growth in destination medicine (highly focused sites with best practice results and efficiency).

			More acknowledgment of the psychosocial aspects of care and recognition of their impact on cost and outcomes.

	To achieve this brighter future, several things are required:

			The public and the participants in the system must educate themselves to the underlying drivers of costs and outcomes including social determinants of health.

			We must acknowledge that the status quo is not viable in the long term.

			The government in and of itself should not be considered the savior or the ultimate villain, but a key factor in the evolution from healthcare to health outcomes.

 editorial advisor, is president of the TPG International Health Academy, which hosts trade/study missions around the world for U.S. healthcare executives. He also provides strategic consulting to health plans and health systems.

Creating a system where health outcomes are paramount is key. Here’s what stakeholders need to do.

Author | David Schmidt

Articles

Why It’s Time to Rethink Healthcare Innovation

The future of United States healthcare