Innovation in the business of Health Care? Absolutely

Last week Wednesday(10-21-2009), I had the distinct pleasure to chair a panel of distinguished representatives of the Health care industry. Five people with very different backgrounds and experience bases, came together to discuss the topic of “Innovation in the Business of Health Care.”. This was one panel in a series that the Lally School’s Severino Center for Technological Entrepreneurship is hosting this semester. We’ve had panels on Innovation in the business of Energy, Innovation in the business of Media, Innovation in the business of Education (launching our new degree in Technology Commercialization and Entrepreneurship).

So this week it was about Health Care. It was an absolutely fascinating discussion. The panelists included the following people:
1. Dr John Bennett ,President and CEO of Capital District Physician’s Health Plan, one of the largest insurance companies and HMO’s in our region. Dr. Bennett is also a well respected cardiologist with many years of clinical experience in his specialty, but also an entrepreneur in that he founded and ran a very large physicians’ practice that services both primary care and specialty needs.

2. Ms Eileen Murphy , Director and COO of the SMART practice for PriceWaterhouse Coopers. Eileen has been part of PWC’s health care practice for 25 years, where she has worked with hospital systems to ensure their financial health and survival, including helping with mergers, helping gain state authorization to add services in markets of need, and, most recently, in helping them with compliance issues with insurance and regulatory bodies through the adoption of specific IT systems that create efficiencies in their operations as well as improved accuracy in their reporting.

3. Ms. Sue Ellen Wagner, Executive Director of Health Trustees of New York State, an affiliate of Health Associates of New York State. HANYS and HTNYS are advocates for hospitals and other health care providers in the ongoing political conversations regarding health care reform.
4. Dr. Patrice Milos, VP and Chief Scientific Officer, Helicos Biosciences, a small firm working on DNA sequencing and digital gene expression processes. Previous to this role, Patrice was Executive Director at Pfizer Global Research &Development.

5. Mr. Omid Moghadam, Personal Genomics Research, Harvard Medical School; Chair, National Development Board, Ignite Institute for Individual Health; and Founder and former CEO, Dossia Corporation. Omid has been an intrapreneur at Kodak and Intel, and holds 32 patents. Omid focuses on medical imaging, healthcare IT, personalized health records and the role of genomics in enabling personalized medicine.

I asked them 2 questions:

1. What are the biggest challenges facing our health care industry today?
2. What trends/opportunities/innovations are on the horizon that can help overcome these challenges?

Lots of the discussion had to do with people and politics. There are so many constituents in health care,
and they have competing interests. There’s no ‘leader’ and, in fact, the panelists noted, health care doesn’t even behave like an industry. It’s lots of mini industries. So that’s obviously a major problem, and potential solutions outside of the political arena seem to lie in the realm of business model innovations. A big one that came up was an experiment that the local HMO, CDPHP is trying in which they are moving to a different payment system for doctors, from fee-for-service to pay-for-performance, which, they believe, will deliver better service for patients, at a lower cost. Interesting that an Insurance company would view itself as the one to take this on, but John Bennett’s vision is just that. The timing is amazing. Time magazine just ran an article about payment systems for doctors. Check out this article.

But beyond the politics…there’s so much technological invention, it’s awe inspiring. According to these panelists, within a couple of years, we will be able to know our own genetic sequences for…..$1000! Once this is known, preventative care can move into action. And we can develop drugs for smaller, specific populations(at a lesser cost at right time), rather than work on blockbusters that we hope will work on everyone. As it stands now, some of us are overmedicated and others under-medicated by commonly prescribed drugs such as, for example, cholesterol meds. But since pharma companies must have major hits in order to support the R&D investments that fuel their growth, they’ve been reluctant to go down this personalized medicine route, which opens up small niche markets. Also, a major cost of drug commercialization is the long and arduous clinical trial process, to prove that the drug in question works across a large population. Well, turns out that most of them don’t…but as we learn more about specific smaller populations, we can custom make drugs to fit.

And that, of course, raises a host of additional political problems. Science can solve lots of problems, but alas, there are always, always, people issues.

View the Panel Video. Lots to think about in terms of innovation!

Happy Halloween by the way….

Reverse Innovation is breakthrough innovation

Did you see last week’s Tuesday (10-20-2009) Wall Street Journal? Front page news:Indian Firms Shift Focus to the Poor . This article describes how Indian companies are unleashing their well trained engineering based workforce on the problem of delivering technological innovation to the vast numbers of poor in that country. Developed countries have not been able to make that happen, as Vijay Govindarajan has demonstrated in his book Ten Rules for Strategic Innovators,on his blog and in his countless speeches. Ford takes its Escort and tries to reduce its cost. Even if they were successful and cut the cost in half (a major success by any means), the price of the car is still unaffordable for most of the Indian population. So Indian companies have taken matters in to their own hands, and begun to fill these needs themselves.

The term that is used to describe this phenomenon is ‘reverse innovation,’ which VG describes in his recent post as “any innovation likely to be adopted first in the developing world.” . Well, that’s one way to think about it…which focuses on the path of diffusion for the innovation.

But actually, these are really, truly breakthroughs. Cars that cost $2000 will enable new forms and uses for personal transportation. Portable water purifiers the size of a water cooler, priced at $43. Cooler sized refrigerators that can run on batteries in situations where power outages occur. ….priced at $70. Wood burning stoves for $23…that burn agricultural waste rather than hardwoods, and produce no smoke. Bank branches that operate off of a smart phone network. And electrocardiograph (EKG) machines for $1000.That’s 10% the price of the standard models. All of these are listed in the WSJ article as products that are in the market today. All of them are changing the way people live, bringing new to the world performance/cost combinations. That’s breakthrough, radical, game changing innovation.

Now imagine all of the new application areas that are enabled because of these breakthroughs. The most apparent markets are obviously the impoverished, since those were the markets that these companies had in mind. But water purifiers that could be owned by individuals could allow lots of new markets.So could banking by phone. So could high efficiency stoves.Watch out,developed nations. Breakthroughs are happening everywhere.