#newindustrymodel

“Value” is an economic reorientation that will shape the direction of $18 trillion in health system spending worldwide in the coming decade. 

The industry re-organization is happening in different ways and at different rates in different markets. But it has progressed to the point where the global trend and scale is clear, and rapidly accelerating: the center-of-gravity to compete in the next healthcare is on entirely new value propositions that enable, if not guarantee, better health outcomes. (Japan is restructuring its entire regulatory system around health outcomes. More on this here.)

The world as we used to define it has morphed into something completely different, one global health system where everything is connected to everything else in a complex, interactive whole. We have effectively killed off the independent sphere – a whole new taxonomy will be needed to anchor value, shape thinking and create strategy at a health system level.

The thing missing from the conventional perspective is new understanding: the pieces matter less than the whole, "things" are secondary to experiences. The new business value to extract from healthcare is not from the discrete use of applications or the latest cool tech pilot, but the way these components can meld together to interact and form a broader architecture for managing information.

A Punk Rock Solution

Critics say today's health system CEOs have proved unwilling or unable to shift their business model to meet the demands of consumers accustomed to rapid, high-quality service in other industries. They're in need of a Punk Rock solution, a radically different mindset that can navigate the transition and tension between entrenched and emerging modes of being.

It's a vision thing.

A Punk Rock solution breaks from the herd of independent minds passing as disruptive. Writing in Modern Healthcare this week ("As Healthcare Changes, Systems Need to Broaden Search to Find Disruptive CEOs"), Harris Meyer describes the pressure on CEOs to adapt to a total change in context for strategy.

Incoming executive leadership, Meyer says, need a new frame of reference for how hospitals, pharmaceutical and medical device companies, and other delivery systems will be "transformed in the coming years into very different-looking organizations whose focus is on [collaborative business models] that keep patient populations healthy in the most cost-effective ways."

"With healthcare changing rapidly, hospital CEO positions turning over at a high rate, and baby boomer senior executives eyeing retirement, some hospitals and health systems realize their next leaders will need a different set of experiences and skills to successfully navigate that new world." 

What’s changed is the world around us is now within us. There is no “out there” that separates technology from people, or people from technology. Said differently, our brains, the neural engines of the mind, will have to work with a new frame around the new world we're encountering. The ecology of mentally processing a complicated zoo of interaction requires a different lens:

• Seeing technology as a form of biology. "We are morphing so fast that our ability to invent new things outpaces the rate we can civilize them," says Kevin Kelly, the visionary thinker and founder of Wired who foresaw the scope of the internet revolution. We're less multichannel than infinite channel. All things being equal, the physics that govern the dynamics of technology creation outweigh the specific features of a piece of technology, or the particular instances in which it gets used. Getting in front of technological momentum, rather than being caught mindlessly in its slipstream, is a new management challenge.
• Making agility a strategic imperative. Adapting to the disruptions of modernity rides on an operating model that is agile, one that is capable of managing a circular expansion of both problems and solutions as a living, breathing thing. Patience is needed to reward and nurture a steady accumulation of small net benefits over time.
• Positioning human-centered design as the interface to engage with people formerly known as target audiences. This is a space with new anchors of meaning: patients as doctors, doctors as consumers, customers as competitors, and competitors as collaborators.
• Looking beyond the clinical setting to improve outcomes. More than 2 billion people worldwide are overweight or obese; more than 400 million people worldwide have diabetes. The next design frontier is less connected health, more distributed health. It's about dissolving boundaries between pieces -- market, industry, technology -- to continuously deliver against a unique ‘patient-to-consumer loop.’
• Becoming the authoritative source of a particular kind of information. As more and more data (and data providers) flood the market, a competitive position based solely on data becomes impossible to defend. Specialized cognition, superior insight into how to manage unique sub-populations (say the 'diabetic asthmatic'), or inventing entirely new standards of care by which others have to play, is a leverageable and sustainable advantage.

Winners are those who can move laterally the fastest, and think at a system level. Cue the entrance of Apple and Amazon…

Outcomes-Based Design

The emerging market to develop and capture is the transition to outcomes-based competition delivered through a 'consumer-grade experience'. Essentially everyone in healthcare -- payers, providers, pharmaceutical and medical device companies -- is groping their way through the white space.

And if you buy into the logic that it's not just one thing that improves outcomes, but many things simultaneously and interactively, then advantage goes to those who are best at creating and managing unique forms of health engagement, at scale. There are islands of features everywhere. The challenge is pulling it all together in a way that a whole system is born and becomes focused on generative value. The data that flows from this system, and then refined into specialized cognition, is the thing that generates new business value, supports population health and guarantees performance.

Data strategy becomes market strategy. You design for the analytics you want to capture.

Paul Romer, an economist at New York University who specializes in the theory of economic growth, says real sustainable economic growth does not come from new resources, but from existing resources that are rearranged to make them more valuable. "Recombination is really the only source of innovation. Economic growth occurs whenever people take resources and rearrange them in new ways." More succinctly, new growth comes from remixing pieces and parts into novel combinations.

Or to put it another way, the transformational remit for today's health market leaders is the ability to creatively explore and conceptualize a new territory, assemble the intellectual viewpoint, and then design the new industry infrastructure -- the nervous system -- to own the space. Which is the role of “digital” in this story. It's value is expressed in the ability to dissolve boundaries, create new identities, remove friction and re-configure entire business systems.

There are multiple billion-dollar business models and markets to develop based on improving outcomes and squeezing inefficiency from healthcare. The path to get there is to make technology so immersive that it disappears into the experience.

Said differently, health system transformation is about a shift in how to think, not in what to think.

/ jgs