When Amazon antes up, you know the game’s getting real.
With the recent announcement that Amazon, JPMorgan Chase and Berkshire Hathaway would team up to offer their employees an independent healthcare option, the pressure is building in one the most notoriously innovation-adverse industries on the planet.
Emerging technology has disrupted the way we shop, watch movies and even how we pick where we’re going to eat. While technology has become affordable enough that 95 percent of Americans now own a cellphone, the cost of health services is still rising.
Amazon is turning up the heat, but the need for innovation has been coming for some time. The world’s population is aging, and soon the healthcare system will be pushed to a boiling point, whether we’re ready or not. According to a UN report, the global population aged 60 and over is growing faster than any younger age group.
We’ve known for a long time that innovating in healthcare is hard. It’s a fractured, complex system that is anything but easy to navigate. But strides are being made, and those that are able to crack the code will not only thrive as the digital revolution finally comes to disrupt healthcare, but make tangible impacts on the quality of human lives.
Here are some of the ways innovation will be sparked in healthcare in the near future:
New compensation models
Physicians have traditionally been paid on a fee-per-service model. It’s pretty simple: the more patients you see, the more money you make. This means that no matter how much a doctor would like to spend more time with patients — which they all do — they have to keep patients coming through the door.
The perception is that doctors make exorbitant amounts of money but consider the hundreds of thousands of dollars of student loans to get through medical school, the staff they have to pay and the cost of running a business, and they’re pressured to keep money coming in, just like anyone else.
The current model makes it nearly impossible for healthcare workers to focus on innovations that would improve long-term patient outcomes, but that’s beginning to change.
A shift to value-based compensation is proliferating throughout hospitals and private practices. Instead of getting paid per patient, compensation might be based on behaviors or processes which encourage better patient outcomes and address quality markers.
Some providers are also moving to straight-salary models, which removes the possibility for varying definitions of quality in value-based models. In this model, doctors receive the same rate no matter what, and it’s more transparent what their total compensation will be.
Collaboration is a critical component of innovation. Current compensation models reflect the fractured system, creating a lack of transparency and equity. New compensation models must be focused on encouraging collaboration, which will allow more practices and hospitals to integrate emerging technologies and innovations that will bring focus back to the patient.
Bridging the funding gap
Innovation doesn’t happen in any industry without funding. And in healthcare, where academics are usually focused on research, commercializing promising breakthroughs has consistently been hung up on funding.
Organizations are now starting to pop up which bridge the gap between research and development in healthcare and commercializing it with private enterprise.
Prime Health has been bringing together healthcare innovators and private investors, in part with a Shark Tank-like event where startups and entrepreneurs can pitch their ideas directly to potential funders. So far, the event has linked 176 companies to investors.
“The strength of Prime Health is really found in a community of individuals and organizations who see the value of collaboration as a tool to drive market-based solutions that reduce costs and improve outcomes across the healthcare industry,” says Nicole McNew, Executive Director of Prime Health.
“We serve as a convener and catalyst to scalable innovations.”
These kinds of partnerships are critical to accelerating innovation in healthcare. For investors, it takes some of the pressure off, as the investment opportunities they’re seeing have already been vetted. Particularly in the wake of the Theranos scandal, healthcare investors want to see opportunities that they can trust.
And on the healthcare side, doctors and academics shouldn’t be expected to become startup CEOs through some kind of magic. Organizations like Prime Health let each side do what they do best, creating a middle ground where innovation can happen.
Innovation-friendly regulatory environment
When Facebook was created, there were no regulations on social media. When Amazon first started selling books online, it didn’t even have to pay taxes. But healthcare is one of the most tightly regulated industries in the country.
And for good reason — innovating in health care means life or death, not just seeing pictures of your cousin’s Florida vacation.
Sparking innovation in healthcare requires careful attention to regulations and processes that ensure human health and safety. The good news is that organizations are recognizing their part in driving innovation. The FDA released a Digital Health Innovation Plan, where they admit that “For the American people to see the full potential of digital health technologies, [the] FDA must lean forward and adapt our processes.”
Government and public leaders have a clear role to play in fostering innovation in healthcare, but healthcare leaders, as well as investors in the space, must all come to the table to ensure regulatory updates are made with everyone’s input.
Adapt the remedy to the disease
Matching the pace of innovation in healthcare to that of other industries isn’t going to happen overnight, even with Amazon jumping into the fray. It will take a concerted effort among stakeholders from all aspects of the field — and beyond.
But it’s coming. The window of opportunity is open for leaders and entrepreneurs to step forward and guide American healthcare through digital transformation. The benefits will be huge, not only for a lot of people’s bank accounts, but for the quality of care and health outcomes we all desire.