Business

SPECIAL to USA TODAY: “The consumer is not the primary payor.” ~One Medical

One Medical Group, points out, “It can take years for entrepreneurs to move through this process.” That’s a long time to wait for innovation to bear fruit—or revenue.

Source: http://www.usatoday.com/story/tech/2015/08/19/column-why-healthcare-innovation-taking-so-long/32005105/ and http://insights.c2bsolutions.com/blog/will-healthcare-innovation-reach-critical-mass-in-2016?utm_campaign=Health%20Consumerism&utm_content=23142823&utm_medium=social&utm_source=linkedin#sthash.XEiUcQSM.dpuf

A recent column in USA Today explores the innovation delay that healthcare is experiencing and narrowed it down to three reasons.

  • The consumer is not the primary payor. Unlike other industries that are influenced heavily by consumers, the healthcare industry is influenced by the payor, most often an institutional or government entity rather than the individual consumer. That means, before you can market an innovative service to the individuals who will actually benefit from it, you have to sell the idea to private and public payors. Once they agree to a reimbursement price—which can vary widely between payors—you have to sell the idea to the physicians who will recommend it to patients. Only then can you get it in front of the patients. As article author Sandeep Acharya, vice president of strategy and new business at One Medical Group, points out, “It can take years for entrepreneurs to move through this process.” That’s a long time to wait for innovation to bear fruit—or revenue.
  • The healthcare landscape is fragmented. “Healthcare decision makers—physicians, hospital systems, insurance companies and regulators—not only vary from state to state, but sometimes even between neighboring cities,” writes Acharya. When a hospital or some other organization introduces an innovative service or product, its reach is limited by regulatory hurdles that can differ by state or region. Consumer products companies and national retailers, for that matter, face fewer hurdles. That could account for why retail clinics have been one of the major success stories of disruptive innovation in healthcare.
  • The healthcare industry is more cautious about change. Acharya attributes the slow pace of innovation to the fact that “too many great ideas stall.” It’s not just cynicism. In 2011, it was already obvious that the healthcare industry has a “hierarchical culture resistant to change”—as Laura Landro wrote in the Wall Street Journal. Healthcare was late on the scene in terms of adopting technologies like EHRs, citing concerns about patient privacy and data security. Yet, the financial industry faced similar hurdles and still managed to progress more rapidly.
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