Leadership Insight

Unfragmented – Features Not Firms

If you’ve attended health innovation conferences over the last decade, there seems to be an interesting paradox at work. On one hand, everyone claims to be looking for ways to help engage patients more effectively in their care, which generally means simplifying and focusing the experience while decreasing its complexity. On the other, there continues to be an absolute blizzard of new products and new companies promoting their unique solutions to problem x, y or z in the healthcare continuum, which ironically increases the complexity and fragmentation of the healthcare experience.

The Fragmentation in Healthcare has never been worse. The Pre-Cambrian Explosion of Digital Health Apps, Point Solutions, and One off custom solves is paradoxically increasing the complexity of the already obfuscated, obtuse, oligopoly of healthcare.

This creates an interesting “churn” at the edges of innovation, with a steady stream of shiny new entrants but also a difficult, often unseen, and rarely talked about exodus out the side door. Many of these innovations are compelling, no doubt, but if there isn’t a real business model the inevitable forces of financial gravity will wreak devastating results (examples are here [raised $52.6m), here[raised $21.4m], and here [raised $4.6m]). You might ascribe this to natural market forces, and it’s true that as in many other sectors, there are startups who are better capitalized, better managed, or benefit from better timing than others, so we would expect survivors and extinctions. But I think the problem runs deeper, and I expect – in spite of the vast size need for innovation in the healthcare industry for care delivery innovation – that there will be significantly more companies failing in the next couple of years. This is what the technorattithe pharmaratti, and retailratti will all find out as they swarm into healthcare delivery coming in with their “quick fix” hammers and nails only to run into the health care business model “buzzsaw”.

What is the “problem to solve”?

Many of these technology fixes, designed to solve an identified engagement, diagnostic or procedural challenge, display a number of similar characteristics. They’re too narrow in scope—the problem they “solve” may instead be part of a much bigger challenge and can’t be addressed in isolation. They haven’t figured out a reimbursement strategy with payers reluctant to support narrow new technologies or health services whose ROI is uncertain at best. They haven’t worked through how their product actually fits within the workflow of existing systems, or what the unintended consequences of their deployment might be, much to the chagrin of early users. Finally, many haven’t even talked to the clinicians or understood how to their solutions can actually fit into the actual realities of routine care of the patient. Getting to the heart of it, they don’t have a sustainable business model.

Disruption can be a force for good, but disrupting only a small part of the continuum often leads to negative consequences, as well as unsustainable businesses. Innovators, not seeing this or willfully ignoring it, are trying to position their products as broad strategic solutions, where in fact, all they really have is a narrow niche product. Perhaps the most defining characteristics of this group is this sad reality:

Many companies are just features, not actual sustainable firms.

Undoubtedly, the features of many of these companies are useful when properly integrated or conceived as part of a comprehensive reinvention of the care delivery process. Whether these be communication apps, telemedicine services, monitoring devices, wellness dashboards or coaching tools, they all could have a place when they’re embedded within a full stack healthcare model. Both our patient members and employer clients have expressed their frustration with the myriad “point solutions” they have to interact with, manage, and pay for as part of a comprehensive health and wellness benefits package. Its frustrating, its confusing, and its creating more complexity when we need more simplicity.

Add product “features” to platform “firms”

Our answer back to this issue is there IS a path forward to “unfragment” the features and integrate them deeply into care delivery models where their value can be organized, streamlined, and unlocked. We definitely have software analogs for this which have unleashed innovation by harnessing into a common framework (the old Creativity loves Constraints concept). The most obvious example is creating a marketplace for all the “feature” developers – all participants are allowed to create independent solutions by leveraging a sharedoperating system that they can “plug into”. Everyone in the ecosystem is free to independently build to the same standards, leverage innate characteristics and capabilities of the shared operating system, and also benefit from a proven business model that natively works for all parties (consumers, developers, and platform). While this thought is not new, it is interestingly not as obvious or intuitive as it should be in healthcare. We have to “unfragment” the delivery and experience of care by creating a primary care delivery firm for all the featurecompanies to fold into.

It is only when this happens, that we will be able to harness the “efficiency” by which new innovation can be directed and applied to the largest problems we have in our current health system.

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