Innovation Has Utterly Failed in US Healthcare: What Can We Do About It?

The United States, like most developed economies, boasts of phenomenal technological growth and innovation. Owing to that growth and innovation, there is higher efficiency in service delivery, top-quality output, lower costs of production, and ultimately, reduced commodity prices across just about every industry. Yet some industries remain stagnant, healthcare being a prime example.

Medical treatment has advanced tremendously over the years. How that treatment is packaged and delivered, however, remains ineffective, inefficient and unfriendly.

Ineffective because the sector is unable to win the battle against the country’s leading causes of death. Deaths due to cancer and heart disease continue to rise year-over-year, while standards of care are unchanged and virtually deteriorating.

Inefficient because millions of people are unable to access health insurance. Economic and legislative barriers to entry push away the most needy and repel those who need insurance the least, but are most important to the functioning of a healthcare system (the young).

Unfriendly because consumers often have to float bills without expecting to or must deal with clunky user-interfaces and overwrought healthcare providers struggling to keep up with unrealistic industry standards.

So, while tech growth and innovation in other industries continue to lower costs and increase customer satisfaction, the healthcare industry is getting and looking worse.

The problems of healthcare boil down to a single missing element: innovation. Bogged down by legacy structures and practices, lobbies, and profiteering, the healthcare industry is clumsy and slow.

There are at least 6 major stonewalls to innovation in the healthcare industry.

1. Long waits to access health care

Millions of patients in the United States are prohibited prompt appointments with their general practitioners. According to a study by the American Medical Association, a majority of patients have to wait an average of three weeks to secure an appointment.

Various other studies have revealed the same problem in other parts of the developed world. A DailyMail survey found that one in three people could not get a same-day appointment in the UK, while one in five patients failed to get a consultation within a week.

Long waits for doctors’ appointments have become a norm. And even when you finally secure an appointment, there’s the ever-dreaded waiting room stint before you see the doctor.

Another issue, attendant to access, is accessibility. No hospital seems to have a consolidated system of care. Patients have to travel from facility to facility to get treatment when interdisciplinary attention is required. Patients with chronic conditions are serious victims of the decentralization of care.

2. Lack of stakeholder accountability

Innovation is predicated on funding, players, and accountability in addition to public policy, technology, and customers.

The normal dynamic of innovation is that an innovator chooses to enhance a service or product in a sector. They require funding for implementation, so they seek out willing investors. The last piece is government, which can make or break an innovation.

Now, suppose there is accountability on the part of innovator and her investors, but the government players are swayed by the interests of other players in the sector. Say the innovation confers a significant advantage on the innovator. Government is likely to disapprove the change and state opposition with impunity.

So, successful innovation is a combinatorial outcome, the result of recombining and converging factors and interests. Certain combinations, or lack thereof, can either promote or discourage innovation.

For the US healthcare sector, the technology might be there, but investor and government support for innovation might not be.

As it stands, the current state of the industry suggests accountability and support are tragically missing. 

3. Failure on the part of industry regulators

One would expect regulators to come in, look at the dire state of the healthcare industry, and say, “I can’t allow these problems to continue. I must do something.” But chances are few regulators see themselves as accountable for the ills of the industry, deluded into thinking that they’re apart from rather than a part of the system.

Another regulatory failure is quantitative. Regulatory agencies tend to measure success with misguided metrics. For instance, regulators will judge the effectiveness of systematic medical care on whether the healthcare provider followed the due process of treatment instead of looking to the patient’s health improvement post treatment.

Furthermore, there is little independent oversight. Chances are that agencies such as the National Committee for Quality Assurance and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), which are meant to monitor compliance with standards in the hospital and insurance sectors, are not neutral in the way they interpret success. It is easy to understand why. These entities are controlled, subsidized, or owned by firms within the very healthcare industry.

4. The existence of hostile industry players

There are copious stakeholders in the healthcare sector. Like anywhere else, each of these players has an agenda and that those agendas sometimes conflict. It is only logical that stakeholders will vie to protect their interests.

There are powerful diehards of the status quo who view change as a threat. They often use the resources at their disposal to influence public policy and resist unfavorable change. One way is to raise arguments to persuade the public into rebuffing changes. When there are few or no players to support innovation, it can be difficult for agents of change to really succeed in driving that innovation.

However, helpful players within the health sector to produce new services or products do not suffice for innovation. There must also be players to conduct outreach. Due to lack of developed consumer marketing and distribution channels through intermediaries, attempts at innovation can wither fast.

In the US, examples of companies that have fallen victim to the outreach barriers are Health Stop and HealthAllies.

Health Stop was a chain of conveniently located healthcare centers financed by venture capitalists. Patients needed no appointments to get served at these centers. Moreover, the centers offered to cover conditions legacy insurers did not. Threatened, their opponents badmouthed them, causing the initiative to flop.

In the process, profits superseded patient’s needs.

5. Prohibitive government control

Some government policies kill innovation too. There are compliance requirements that can be quite demanding. For instance, a company introducing a new product is required to show that the new product works as marketed, that it’s safe, and that it’s cost-effective in relation to competing products.

Governments that consolidate healthcare funding into a single, publicly controlled system also tend to hinder innovation. In this set-up, the government will want to control costs, so they’ll lock out venture-capitalist who would otherwise fund new health ventures.

Normally, such a government-controlled system tends to keep the prices of drugs at an all-time low. While consumers will enjoy this situation, innovators will not because the margins are squeezed. 

6. Innovators’ failure to consider competing technologies 

Some innovators become obsessed with their own breakthroughs, blinded to competing ideas.

We can always learn from what other people are doing. As it concerns innovation, when you choose not to, adoption can suffer. An innovation will often die if it doesn’t receive the necessary adoption of the people it is created for.

Often, industry players will turn down any innovation if it is too costly or less appealing than existing ideas or products. An industry player can tune out an innovation—no matter how good it is—due to your competitor's activities.

If you aren’t attuned to the healthcare market and recent innovation, you won’t be able to anticipate their reactions. 

Plugging the holes with innovative approaches

So, can the problem of innovation in the healthcare sector be solved? The short answer is “Yes.”

Here are the 3 approaches necessary to redress the sector’s lack of innovation. 

1. Consumer-focused approach

The healthcare sector needs to become more consumer-centric. A consumer centric healthcare system would be more convenient in terms of consumer access to insurance, more effective in terms of its delivery, and less-expensive, and would generate better health outcomes.

It is also important to have low-cost health insurance. Consumers need to be able to afford health insurance; otherwise the already large segment of the US population that remains without health coverage will continue to grow.

2. Technology approach

Technology is all about new and advanced ways of doing things. Innovations that are focused on how technology can improve healthcare would give rise to new drugs, new diagnostic methods, advanced medical devices, and new drug delivery systems.

All these advancements would assure better treatment and consumer experience overall. The use of state-of-the-art methods of treatment—like in any industry—may also lower related costs, which ultimately reduces costs of care. The care would also be less disruptive or painful. A good example is preventative medicine to avoid invasive treatment.

Technology would also improve both diagnostics and prognostics. The use of sensors, for one, can empower patients to monitor various ailments with ease and accuracy.

Such innovations translate to improved treatment that patients can access without having to travel or seek help from a physician. How does this innovation benefit healthcare companies and providers? Less overhead, for one.

3. Business-model approach

Innovators need to recognize the interests of different players and establish what business models can benefit these players and the consumers of healthcare. This is not to say that it would be easy to satisfy all these intersecting and cross-purposed interests, but it is the role of innovators to figure such things out.

An innovative business model aims to increase profits and consumer experience, not make money at the expense of consumers. Healthcare should operate no differently.

With innovative business models, insurers and providers can increase efficiency, save time, and improve care.

Conclusion

It is possible to reinvigorate the healthcare industry with a bit of innovation. Some of these necessary steps require legislation, others require technology, while others still require personal initiatives and thinking outside the box.

The truth is that all innovators have a role to play in improving the current state of the healthcare industry. Despite the obstacles (which are not insurmountable). All it takes is a few steps in the right direction and a renewed mindset that recognizes our current business model is unsustainable.