In mid-August I enjoyed the opportunity to join a team attending the Health:Further innovation ‘festival’ in Nashville. The event brought together large healthcare organizations, industry experts, investors, and digital health innovators to talk about how we can rise to the challenges facing the healthcare sector.

A common theme was how industry ‘incumbents’ can leverage innovation capabilities, and specifically how they might engage with relatively small external teams and startups.

A number of experts spoke about the barriers to innovation common at any large business organization–leading me to reflect on my own prior experiences and numerous peer conversations I’ve had: why is it so hard for established health care organizations to create truly innovative ways to deliver care?

Defining ‘True’ Innovation in Healthcare

For the purposes of this conversation, ‘true’ innovation relates to initiatives which re-engineer care delivery, in pursuit of the ‘quadruple’ aim of greater efficiency, improved outcomes, optimized patient experience, and sustenance of the workforce.

I’m not necessarily referring to small, incremental changes–which in aggregate can improve operations–but inherently (and despite ‘branding’ to the contrary) remain focused on the perspective of the organization. In an industry unique for its separation of its purchasers from its consumers, re-designing care from the perspective of patients is paramount–perhaps we need to get from doing the same thing better, to doing something altogether different.

Payer and Regulatory Inertia

A primary reason current delivery models are so entrenched relates to the complexity of the payer and regulatory context of healthcare.

All of the process and structural variations between commercial and public payers form one side of an intricate moving three-dimensional puzzle, and health care organizations have had to become experts at building and maintaining the other side, matching as perfectly as possible to make the clock work.

This means high-cost-of-entry, including expensive bricks-and-and mortar, and a highly-trained workforce with narrowly-defined productivity.

Given what they are spending to build and maintain this infrastructure, organizations need it to “spin”– and any potential change to the gearing is viewed with suspicion.

Furthermore, as policymakers advance and then withdraw systemic changes in the payer environment, market uncertainty is exacerbated; at the same time patient cost-sharing and rising employer premiums continue to pressure prices downward–both of these dynamics drive organizations to double-down on what they’re already good at, no matter if it was built in response to a sorely dysfunctional system.

It Starts at the Top

Organizational culture and leadership mindset are particular barriers to innovation in healthcare. Leaders typically came up through the ranks in existing organizations, and become successful on account of their running existing operations well–seeking entirely new approaches to care delivery is not a natural part of their cognitive map–they are true experts at the status quo.

Healthcare leaders view growth in terms of mergers and acquisitions, expanding geography, and increasing market share for existing high-margin service lines, rather than seeking entirely new and disruptive approaches to the marketplace.

Their own intense accountability to their boards is grounded in near-term hard dollar revenues, and they harbor a natural intolerance of longer term or relatively uncertain ROI’s–a dynamic anathemic to the fail-fast methods often embraced by successful innovators.

Significant operational changes pointing at soft outcomes (quality, patient experience, staff engagement) are hardly a consideration–even mission driven organizations are held most accountable to the margin.

In those rare organizations where there is dedicated infrastructure for innovation, cultural and leadership incongruities typically prevent the ‘spread’ of effective change–existing business units are so busy spinning the wheel, they don’t have time or capacity to pivot.

Challenges with IT

Such failures to ‘spread’ are also indicative of the ongoing rigidity and entrenchment of current technological solutions–data streams are ‘owned’ and unavailable, and vendors and local IT teams are recalcitrant toward the integration of new tools.

Alternatively, solutions are sought in technology alone, without embracing the complexity of clinical operations and understanding the need to fully understand workflows, variation, and the systemic dynamics affecting change. Innovators understand that technology and operations have to work in concert, requiring a high level of managerial commitment–but for the ‘incumbents’, committing to that level of change might sap the immediate work of keeping the lights on and the doors open.

The Innovation Horizon

The reality is that healthcare will still only be able to spin the old wheel so fast, and that market pressures and consumer expectations are only going to increase–significant change is coming to the industry regardless of the policy milieu.

The real question is whether existing organizations will be able to generate these changes internally, or more likely in close partnership with smaller innovation teams–or instead, will true change in healthcare have to come from the outside?