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Tag: Innovation

Hospitals’ Twenty First Century Time Warp

There has been a lot of controversy in health policy circles recently about hospital market consolidation and its effect on costs.  However, less noticed than the quickened pace of industry consolidation is a more puzzling and largely unremarked-upon development:  hospitals seem to have hit the wall in technological innovation.   One can wonder if the two phenomena are related somehow.

During the last three decades of the twentieth century, health policymakers warned constantly that medical technology was driving up costs inexorably, and that unless we could somehow harness technological change, we’d be forced to ration care.  The most prominent statement of this thesis was Henry Aaron and William Schwartz’s Painful Prescription (1984).  Advocates of technological change argued that higher prices for care were justified by substantial qualitative improvements in hospitals’ output.

Perhaps policymakers should be careful what they wish for.  The care provided in the American hospital of 2013 seems eerily similar to that of the hospital of the year 2000, albeit far more expensive.    This is despite some powerful incentives for manufacturers and inventors to innovate (like an aging boomer generation, advances in materials, and a revolution in genetics), and the widespread persistence of  fee for service insurance payment that rewards hospitals for offering a more complex product.

Technology junkies should feel free to quarrel with these observations.  But the last major new imaging platform in the health system was PET , which was introduced into hospital use in the early 1990’s.  Though fusion technologies like PET/CT and PET/MR were introduced later, the last “got to have it” major imaging product was the 64 slice CT Scanner, which was introduced in 1998.  Both PET and CT angiography were subjects of fierce controversy over CMS decisions to pay for the services.

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Open Research For Open Cures: A Report From Sage Congress

Over four years of Congresses, Sage Bionetworks has drawn together leading thinkers and doers throughout the fields of genetic research and drug development. For two days each year, the conference floor is colonized by clumps of eagerly networking PhDs from academic, pharma, government, non-profits, biotech firms, and patient advocacy groups–people who often glide from one domain to another within this tight-knit cohort.

A cohort, certainly, we can characterize this group of attendees, sharing as they do a mysterious language drawn from years of research most of us will never understand. But is it a community? That will be tested over the following year as Sage Bionetworks lets go of the Congress. Founder Stephen Friend says it is up to others to create the next Congress, and its success or failure will be a measurement of the sweat and passion that Friend and Sage have put into attempts to build a community.

Why should a reader look further at this struggle among a tiny elite, rather than clicking on the next article? Well, first, if you’re one of the 48% of Americans who took a prescription drug this month, you should be concerned about where new breakthrough drugs will emerge. If you visit this web site because you want a more responsive health care system that can match patients to treatments more quickly and cheaply, recognize that new methods are important nowhere as much as at the foundation of the system where new treatments are discovered. And if you are just curious about the potential for global cross-institutional teams and loose networks connecting experts with ordinary members of the public to find creative solutions to old problems, this article will provide insights.

Don’t get too close, you don’t know what I have

The premise on which Friend founded Sage is that research and drug development have stagnated and cannot progress without more collaboration and data sharing. Therefore, with all due regard for the presentations at the recent Sage Congress on cancer research projects and other individual experiments, the real theme of the conference is in the keynotes about open source, the use of social media, and crowdsourcing. The challenge of this community–if we find that it has indeed become a community–is to analyze and deal with the particular challenges that genetic research and drug development inject into trends toward open collaboration.

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Do Our Cells Have Their Own IP Address Yet?

In the future, implanted chips will have the ability to stop food absorption when caloric intake reaches 2200. Cells in our forearm will be able to monitor our glucose levels and adjust our insulin appropriately. These implantable cells or “chips” have their own IP address with their own circuitry that is connected to a network 24/7. Through this network, cells communicate with real-time super computers to synthesize the next step for an individual’s body. If Dr. Anthony Atala can utilize 3D printers to create a new kidney, then it is only a matter of time before we can incorporate the circuitry within an organ necessary to monitor its function wirelessly.

This was the future I was challenged to paint in my talk at TEDMED 2012 at the Kennedy Center for the Performing Arts in Washington, DC. With the conclusion of  TEDMED 2013 last week, I ask myself, where are we one year later?

A caveat: The following are simple overviews on novel technologies I had been tracking over the past year and does no justice to the many amazing leaps we have made in innovative science and medicine during this time.

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Driving Front Line Innovation In Health Care

Jennifer Stinson was a nurse at The Hospital for Sick Children (SickKids) in Toronto who enjoyed brainstorming new ideas for improving care, especially for the kids with cancer she treats. But even as she gained status by getting her PhD and becoming a clinician scientist, she came up against persistent bureaucratic and organizational barriers to innovation.

Stinson’s challenge is common at big organizations, but overcoming bureaucracy and breaking down silos is especially critical in healthcare. To tackle these obstacles at SickKids, CEO Mary Jo Haddad in 2010 elevated innovation to a “strategic direction,” and engaged Innosight to help devise a full system needed to spur innovation. The resulting system has three major components:

  1. An Innovation blueprint detailing the types of innovations the organization wants to encourage. SickKids prioritized encouraging doctors, nurses and clinicians to look for unmet needs they could address, rather than wait for solutions from IT or top management. That required creating a focus group with 25 front-line healthcare workers to discover and catalog key “jobs to be done” (like reducing the length of hospital visits), surveying all 5,000 employees, and training most of them on how to integrate the innovation system into their daily practices.
  2. An innovation pipeline to reliably take ideas from concept to reality. This involved establishing a new 18-member Central Innovation Group of leaders from different areas of the hospital, a team that was tasked with prioritizing and advancing ideas and projects through various stages. The team helped innovators test prototypes, make adjustments, and then scale to a wider population.
  3. An innovation culture that features the right people, in the right roles, speaking a common language of innovation. A key enabler of this culture was the establishment of a $250,000 Innovation Fund to provide seed money for promising ideas. Now, instead of being stalled by permission hurdles that suppress initiative, promising new ideas could be funded, fast-tracked and prototyped.

Consider how the new system helped Stinson bring a transformative innovation to life. Every year at SickKids, thousands of children are battling various forms of cancer. It’s vital that they keep accurate diaries tracking their pain, but if it’s not done daily the data are virtually worthless. Typically these diaries must be filled out by hand, an annoying task that children with cancer aren’t motivated to do. The result is poor reporting and suboptimal pain management.

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The Affordable Care Act: Like It Or Not, It’s Catalyzing a Golden Age In Health Care Investing

Now that President Obama has been re-elected and the Supreme Court has upheld the Accountable Care Act, healthcare reform is here to stay. So what does reform mean for healthcare investors? I believe it will usher in a new fertile period for innovative,venture‐backed companies that can navigate the brave new world of healthcare delivery and management.

The Accountable Care Act impact on healthcare IT investing is already being felt.Venture investment in 2013 is showing significant growth from last year. In 2012,according to PWC, a global accounting firm,the life sciences sector which includes healthcare IT accounted for 25 percent of all venture capital dollars invested which totaled nearly $1.2 billion in 163 deals,more than double the $480 million in 49 deals in 2011 and almost six‐times the $211 million in 22 deals in 2010.

Now is the time to make order out of chaos and to set the stage for a next‐generation healthcare system that can effectively service our nation. At Psilos Group, we have just released our fifth Healthcare Economics and Innovation Outlook and identified the following four areas as the most promising opportunities for healthcare investors in 2013 and beyond: Private health exchanges, consumer‐focused insurance programs, 21st century healthcare technologies, and innovations that reduce error and waste.

Investing In Exchanges

The healthcare insurance marketplace—and the way insurance is bought and sold—is facing massive change.Healthcare insurance exchanges, both public and private,promise to create a more organized and competitive market for buying healthcare insurance, which could moderate price increases that are currently spiraling out of control.

From our perspective, exchanges are an intelligent place to invest. Software and services will power the exchanges. Psilos envisions massive opportunities for technologies that enable operators of both public and private exchanges to build high functioning platforms, including the shopping software and back‐end administrative technology and service products needed to serve tens of millions of people efficiently.

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Doctors: We Can’t Leave It to Business to Educate Us

Recently I came across yet another media article with suggestions as to how digital health products can gain more widespread adoption. The writer notes that “we can learn a lot from the pharma and healthcare industries,” and goes on to discuss the importance of engaging the doctor.

This article, like many I read, doesn’t acknowledge the downsides of using pharma’s tactics.

I have to assume that this is because from a business perspective, there aren’t a lot of downsides to pharma’s tactics. Pharma, along with many other healthcare industry players (hospitals, insurance companies, device manufacturers) has overall been extremely successful from a business standpoint.

So if the intent is to help digital health companies succeed as businesses, then by all means one should encourage them to copy pharma’s tactics.

But as we know, what works for business has often not worked well for serving the needs of individual patients, or to society from a health services and public health perspective.

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App Prescribing: The Future of Patient-Centered Care

Dr. Leslie Kernisan recently wrote a great piece about app prescribing, asking, “Should I be prescribing apps, and if so, which ones?” Since Happtique is all about integrating apps into clinical practice, I jumped at the chance to add to this important discussion.

Dr. Kernisan is right to be concerned and somewhat skeptical about app prescribing. More than 40,000 health apps exist across multiple platforms. And unlike other aspects of the heavily-regulated healthcare marketplace, there is little to no barrier to entry into the health app market—so basically anyone with an idea and some programming skills can build a mobile health app. The easy entry into the app market offers incredible opportunity for healthcare innovation; however, the open market comes with certain serious concerns, namely, “how credible are the apps I am (or my patients are) using?”

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The Napsterization of Health Care


Two weeks ago I had the good fortune to be invited back to the South by Southwest Conference (SXSW) to participate as a judge of a digital healthcare start-up competition. SXSW, which takes place in Austin, TX, is historically an indie music gathering that has evolved into a massive mainstream music conference as well as a monumentally huge film festival, like Sundance times twenty. There are literally hundreds of bands and films featured around town. There has now evolved alongside this a conference called Interactive that draws more than 25,000 people and focuses on technology, particular mobile, digital, and Internet.

In other words, SXSW has become one of the world’s largest gatherings of hoodie-sporting, gadget-toting nerd geniuses that are way too square to be hip but no one has bothered to tell them. Imagine you are sitting at a Starbucks in Palo Alto, CA among 25,000 people who cannot possibly imagine that the rest of the world still thinks the Internet is that newfangled thing used mainly for email and porn. SXSW is a cacophonous melting pot of brilliance, creativity, futuristic thinking, arrogance, self-importance, ironic retro rock and roll t-shirts and technology worship. One small example: very hard to get your hands on a charger for anything other than an iPhone 5 because, seriously, who would have anything else?

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The Health IT Scandal the NY Times Didn’t Cover

In case you missed it, the shocking news was that health IT companies that stood to profit from billions of dollars in federal subsidies to potential customers poured in ­– well, actually, poured in not that much money at all when you think about it ­– lobbying for passage of the HITECH Act in 2009. This, putatively, explains why electronic health records (EHRs) have thus far failed to dramatically improve quality and lower cost, with a secondary explanation from athenahealth CEO Jonathan Bush that everything would be much better if the HITECH rules had been written by Jonathan Bush of athenahealth.

Next up: corporate lobbying for passage of the 1862 Pacific Railroad Bill is blamed for Amtrak’s dismal on-time record in 2013.

The actual scandal is more complicated and scary. It has to do with the adamant refusal by hospitals and doctors to adopt electronic records no matter what the evidence. Way back in 1971, for example, when Intel was a mere fledgling and Microsoft and Apple weren’t even gleams in their founders’ eyes, a study in a high-profile medical journal found that doctors missed up to 35 percent of the data in a paper chart. Thirty-seven years later, when Intel, Microsoft and Apple were all corporate giants, a study in the same journal of severely ill coronary syndrome patients found virtually the same problem: “essential” elements to quality care missing in the paper record.

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Unleashing the Innovation Monster

I have been absent from the blogosphere for about two months. The fact is, there just isn’t all that much new to write about. Healthcare spending growth continues to moderate, but not by enough to stave off forecasts of doom for Medicare and Medicaid. Nor can employers begin to shift money from health benefits back into wages. But wheels are turning. Health networks are expanding as providers prepare to offer ACOs and/or increase their bargaining clout. A handful of states are poised to start up exchanges with the feds ready to take the reins in the laggard states. Aon/Hewitt is about ready to launch a private sector exchange. We will start to learn whether exchanges save or destroy private health insurance.

The Affordable Care Act has had many detractors but at least it has disrupted the status quo. We needed to see fundamental changes in how we pay for and deliver healthcare services and the ACA has delivered. But ACA has brought us a very particular set of changes. Time will tell if we have chosen the right path.

Even as the industry changes the way it does business, one critical aspect of change is missing. The faces are all the same. The same large systems that dominated the fee for service world seem poised to dominate the shared savings world, and the same insurers that dominated the traditional employer-based insurance market stand ready to dominate exchanges. Value might be created when old businesses play by new rules, but even more value is created when new players are free to enter and perhaps even break the rules.

Entry is the engine that drives economic progress. Entrants bring new technologies to manufacturing and new service models to sales. Threatened by entry, incumbents strive to innovate and improve customer service. This is as true in high tech industries as it is in the service economy. Research confirms that entry is ubiquitous – in a typical manufacturing industry, fully one third of established firms are replaced by entrants within five years. Though the data is not as readily available, turnover in the service sector is likely even higher.

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