4 Ways Health Care Providers Can Address Disruption

laptop with health care documents
Carroll Elger|
June 28, 2019

In a difficult health care environment for consumers, the demands placed on health care providers are more challenging than ever. This is being compounded by digital disruption across most national markets, the now-classic Uber vs Taxicab dilemma. As we covered in our previous blog entry, 3 Reasons Why Health Care Providers are Facing Disruption, disruption resulting from rapid technological advancement is reshaping the health care industry by finding new ways to address consumer demands, driving the cost of certain services down drastically, and generally upending the classic business models of the industry.

Some may write this off as the “cost of doing business”, pointing out that plenty of business models have fallen by the wayside in the modern era. However, this explanation fails to take into account that technology and digital innovations advance at a far faster rate than the changes of the past. If health care providers decline to address disruption, they will find themselves unable to meet consumer demand and facing steep losses in market share. To avoid this, we want to share four different ways health care providers can address disruption. Some of these approaches are better than others, and we’ll provide reasoning for why that is.

Approach #1: Stick with Continuous Improvement

The approach to innovating in health care has traditionally been the continuous improvement (CI) model. Continuous improvement aims to make incremental changes to business practices over time, and has done a good job in the past of improving the care given by providers.

Despite this history of success, sticking with continuous improvement to address disruption is most likely a mistake. A key aspect of digital disruption is that the rate of technological change is always increasing, meaning that advancements are developed faster and hit the market sooner as time goes on. Continuous improvement is designed to make incremental change, which is not enough to keep pace with disruption. With health care startups able to hit the market just 8 months after conception, incremental changes cannot compete at that pace.

Approach #2: Developing a Dedicated Innovation Program

The next horizon for internal innovation beyond continuous improvement is adopting an internal innovation program totally dedicated to discovering and developing transformational innovation. This program should aim to build a Culture of Innovation for your company, one in which all employees are encouraged to think like an entrepreneur and establishes innovation as a long-term priority in the company.

An innovation program that has a goal of creating a Culture of Innovation is one that will bring innovations great enough to change business models in the ways necessary to beat disruption. When employees are consistently involved in innovation, are provided with an empowering platform to share their ideas, and the resources are in place to handle the innovations that come from those ideas, a health care provider can respond rapidly to disruption without having to look outside the organization.

While an innovation program is what we consider the best way to beat disruption, it isn’t perfect. Companies must be prepared to handle a large volume of ideas from employees, so that ideas aren’t forgotten and employees lose their sense of empowerment from the program. If this is considered in planning the program, however, a health care provider can use their innovation program to beat disruption and even become the disruptor themselves in the future.

Approach #3: Participating in Government-Funded Innovation Initiatives

Recently, the federal government has been spending billions investing in innovation projects including in the health care industry. For a provider facing disruption, this can be a way to secure large amounts of funding for innovations that can overcome disruption.

The federal government tends to exclusively fund large projects aimed at a single innovation or set of related innovations. The challenge is to find a single innovation that will help your organization beat disruption, and also help the country at large, not just your organization. From there, you’ve also got the added work of reporting and meeting government requirements. Government funding can be a solution to disruption, but is really only able to provide a one-time boost to innovation versus providing a way to consistently be an industry leader.

Approach #4: Acquiring a Smaller Disruptive Company

This could colloquially be referred to the strategy of “if you can’t beat ‘em, join ‘em”. Disruption can come from the very biggest market leaders, but is primarily driven by small providers and scrappy startups. These companies appear rapidly to meet customer demand and take innovation to market by avoiding corporate red tape. If a health care organization feels like it can’t innovate internally (which it almost always can) then they can choose to buy out a disruptive company with the intention to use the innovation they’ve created so far and try to infuse the spirit of the company into their own.

Acquiring a small company can be a risky proposition. On the plus side, they provide an instant boost of innovation into the company that can’t be matched elsewhere. However, taking the startup out of the startup realm means they’ll almost certainly be unable to replicate the innovations they made in a more free state. The market for acquisitions is very competitive, and bidding on a hot startup or new type of provider like an urgent care chain can get very expensive, very quickly. Acquisition is best left for providers that have fallen far behind due to disruption, as opposed to those who want to get out ahead of disruption.

Which Approach Should I Take?

What you pick to innovate with in your company does depend on your unique situation and how your company thinks about innovation. At Ideawake, we know that decision makers can object to innovation programs, as they may sound daunting at first. If this is a concern of yours, you might want to read our blog on overcoming objections.

The most important thing to remember is that disruption is occurring in health care right now, and that any action taken to beat it is a positive action.

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