New Marketplace
New Risk, New Business Models

New Marketplace Survey: The Sources of Health Care Innovation

Insights Report · February 16, 2017

Analysis of the fourth NEJM Catalyst Insights Council Survey on the New Marketplace. Qualified executives, clinical leaders, and clinicians may join the Insights Council and share their perspectives on health care delivery transformation.

 

Health care stakeholders are seeking disruptive innovation to transform the U.S. health care sector in the years ahead. In NEJM Catalyst’s most recent New Marketplace survey, our Insights Council members — comprising executives, clinical leaders, and clinicians — make it abundantly clear they believe innovation will come from beyond traditional health care organizations. Only outsiders can overcome the limitations of the current landscape, from better technology to creative payment models. For instance, in the area of primary care, 65% of survey respondents say the most promising new entrants are likely to emerge from focused start-ups.

Let’s first consider where respondents feel disruptive innovation in health care is most needed. Hospitals and health systems top the list, with nearly two-thirds of respondents putting this among their top three sectors in need of innovation. These results are particularly notable because Insights Council members are themselves based at organizations directly involved in health care delivery. Executives, clinical leaders, and clinicians are roughly equal in assessing the need for innovation at hospitals and health systems.

Disruptive Innovation in Healthcare: Sectors Most in Need of Disruption

New Marketplace Insights Report. Click To Enlarge.

Health care IT (for vendor technologies such as EHRs and clinical decision support) and primary care register second and third among sectors most in need of innovation, at 47% and 36% respectively. Specialty care lands much farther down the list, with only 18% of respondents placing it among their top three sectors.

A dichotomy emerges when respondents consider whether buyers are willing to pay for solutions. Most notably, health care IT shoots to the top of the list, named by half of respondents. Hospitals and health systems are second (46%).

Disruptive Innovation in Healthcare: Sectors Where Demand for Innovation Is High and Buyers Are Willing to Pay

New Marketplace Insights Report. Click To Enlarge.

Only 23% of respondents think that buyers are willing to pay for primary care innovation. Pharmaceuticals, which is fourth among sectors most in need of disruptive innovation in health care, ranks third when willingness to pay is added to the calculation. The juxtaposition between primary care and pharmaceuticals is noteworthy, potentially demonstrating the markets’ tolerance of increasing drug pricing, but less accepting of the costs necessary to innovate in primary care.

Whether talking about disruptive innovation in hospitals, health care IT, or primary care, respondents say focused start-ups will lead the way. Respondents believe this most strongly for primary care. Some leading examples of primary care start-ups include Iora Health and Oak Street Health. Both companies have developed greenfield sites to deliver care that is centered on patient needs and supported by innovative payment models.

Disruptive Innovation in Healthcare: Source of Promising New Entrants

New Marketplace Insights Report. Click To Enlarge.

Surprisingly, 63% of respondents say change in health care IT will come from focused start-ups, not the many established companies in this sector. And 54% of respondents say that disruptive innovation for hospitals and health systems will come from start-ups.

Insights Council members responding to the survey also volunteer some areas where innovation would be welcome — requesting interventions to reduce paperwork, enable clinicians to pay more attention to patients, and promote healthy behaviors among patients. One respondent notes that a focused health care start-up could help with “the huge amount of lost time in physician EMR documentation that adds no real value to the patient experience or the physician experience.” Another comments that a focused start-up could develop more innovative uses of out-of-hospital, home-based Internet monitoring of chronic conditions with easy access and rather quick feedback.

VERBATIM COMMENTS FROM SURVEY RESPONDENTS

If you could start a new company to disrupt health care delivery, what need would it address?

“Uncontrolled cost of our broken system.”
— Clinician at a midsized nonprofit community hospital in the Mountain West

“The lack of interoperability between EMRs and the end user interface of EMRs.”
— CMO at a large for-profit payer in the Midwest

“Delivering care at people’s homes/doorstep.”
— Director of a large nonprofit community hospital in the mid-Atlantic

“Connecting the patient to their primary care provider and working together to provide the best treatment plan directed by evidence-based medicine.”
— Clinician at a large nonprofit health system in the South

“Focus on more patient accountability and responsibility for their health.”
— Vice President of Medical Affairs at a large nonprofit community hospital in the South

“Way to minimize the social factors in delivering the best health care (access, food, housing, transportation).”
— Director of a large teaching hospital in the Midwest

“Gathering of a truly comprehensive, biopsychosocial medical history by Internet, at home, for review and revision in the office.”
— Clinician at a large nonprofit health system in the Pacific West

“Getting rid of the vast majority of administrators and middle managers.”
— Service Line Chief at a large community hospital in the mid-Atlantic

“Lowering the cost of care for chronic disease by better matching business models to the condition.”
— Director of a large nonprofit health system in the Mountain West

“Break down barriers for patient referrals, new drugs, and services.”
— Clinician at a large teaching hospital in the mid-Atlantic

“The way clinicians communicate between themselves and the patients.”
— Department Chief at a large teaching hospital in the Midwest

“The distribution of quality health care. Quality of care should not be determined on whether you live in a rural, suburban, or urban area. With the advancing in technology and telemedicine, the same quality of care should be accessible no matter where you live.”
— Director of a large nonprofit health system in the Northeast

Who has the most influence in driving adoption of these new products, services, and approaches to patient care? Provider executives/clinical leaders and payers are tied at 92% in the survey. Interestingly, just over half of executives rate the influence of clinicians as extremely or very influential, compared to one-third of clinicians who give themselves this rating. This disparity is consistent with widespread reports of physician burnout and sentiments of disenfranchisement.

Disruptive Innovation in Healthcare: Influence of Stakeholders in Driving Adoption of a New Approach to Patient Care

New Marketplace Insights Report. Click To Enlarge.

Patients, who arguably will be most impacted by these changes, are ranked last in influence (63%). Yet respondents say it is more important for innovation in provider organizations to improve patient outcomes/patient experience (99%) than it is to lower cost growth (96%).

Disruptive Innovation in Healthcare: Importantance of an Innovation Contributing to Lowering Cost Growth / Improving Patient Outcomes

New Marketplace Insights Report. Click To Enlarge.

Though executives, clinical leaders, and clinicians all are pinning their hopes for disruptive innovation in health care on outside forces, the reality is that innovation has to integrate with existing models. In other words, outsiders might build it, but insiders have to accept innovation for real, sustainable change to occur.

METHODOLOGY AND RESPONDENTS

  • In December 2016, an online survey was sent to the NEJM Catalyst Insights Council, which includes U.S. health care executives, clinical leaders, and clinicians at organizations directly involved in health care delivery. A total of 519 completed surveys are included in the analysis. The margin of error for a base of 519 is +/- 4.3% at the 95% confidence interval.

  • The majority of respondents were clinicians (45%), with executives (27%) and clinical leaders (28%) nearly evenly split. Most respondents described their organizations as hospitals (40%) or health systems (16%). These hospitals were predominantly midsized (38% had 200–499 beds) or larger (49% had 500 or more beds).

  • Only 9% of respondents indicated that their major affiliation was with a physician organization. Those physician organizations tended to be big — 49% had 100 or more physicians.

  • About three-quarters of the organizations (74%) were nonprofit, with the remainder of respondents coming from for-profit organizations. Every region of the country was well represented.

Check NEJM Catalyst for monthly Insights Reports not only on the New Marketplace, but also on Patient Engagement, Leadership, and Care Redesign.

Join the NEJM Catalyst Insights Council and contribute to the conversation about health care delivery transformation. Qualified members participate in brief monthly surveys.

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