Why We Need Health-Care Business Innovation More Than Ever

As the health-care debate rages on–bringing with it a government shutdown–here’s how technology and innovative thinking can help ease the pain.

Why We Need Health-Care Business Innovation More Than Ever
[Image: Flickr user Serge Melki]

The CNN headline speaks volumes: “Government shutdown: Get up to speed in 20 questions.” And the debate continues. A huge part of the debate stems from the policy and the politics around our health-care system and the costs associated with it.


What continues to be missing from the debate is the way health-care “business” is conducted–and can be modified for better results. For proof, look no farther than yesterday’s rollout of the Affordable Care Act, as described in this New York Times story:

“Heavy volume contributed to technical problems and delays that plagued the rollout Tuesday of the online insurance markets at the heart of President Obama’s health care law, according to state and federal officials, who were watching closely for clues to how well the system will work and how many people will take advantage of it.”

When it comes to innovating business models for health-care delivery, it appears we have failed to keep pace with clinical advances, and surprisingly with most other industries.

Here I want to share with you, in part, what I wrote in one of my books, Sustained Innovation (May 8, 2007) about this very topic. Although some of the data I am sharing here may have changed slightly since the book was first published, the fundamentals remain the same.


The Critical Issues

Let’s analyze the health-care delivery system from the perspective of information flows. We have a wide variety of players: doctors, hospitals, insurance companies, employers, government, and researchers, all operating in an environment that makes up a complex supply chain. And for this complex supply chain, transparent business models and processes need to be established to enable collaboration.

Health-care services have spent less than one-tenth what banks and other industries have spent on technology investments to create better information flow and cross-boundary collaboration. Various studies have yielded this alarming picture:

Every year, medical errors cause 98,000 deaths (some studies suggest the number is twice that) and one million injuries.

Medical errors kill more people each year than breast cancer, AIDS, or motor vehicle accidents.

Thirty to forty percent of the money we spend on health care–more than half a trillion dollars a year–is spent on costs associated with “overuse, underuse, misuse, duplication, system failures, unnecessary repetition, poor communication and inefficiency.”

One-fifth of medical errors are due to the lack of immediate access to patient information.

Some 80% of medical errors were initiated by miscommunication, including missed communication between physicians, misinformation in medical records, mishandling of patient requests and messages, inaccessible records, mislabeled specimens, misfiled or missing charts, and inadequate reminder systems.


Three out of every 10 tests are reordered because results cannot be found. Patient charts cannot be found on 30% of visits.

The problem is that vital information is missing throughout the entire supply chain. What information is available must be transferred laboriously by paper; databases in hospitals and doctors’ offices are often unable to talk to each other, because there are no data standards.

In some settings, doctors and nurses spend as much time on paperwork as they do treating patients. Did you know that the 130,000 pages of Medicaid and Medicare rules and regulations are three times the size of the Internal Revenue code? Did you know that a Medicare patient arriving at the emergency room must sign eight different forms?

When all of this is resolved, and we think it will be eventually, the real innovation will not be about new health-care technology or policy. It will be how the medical community rewires the way it works and collaborates by innovating business models with streamlined organization, processes, and automation.


Health-care Delivery

We have to start believing that patients should have access to their medical records and be full participants in the health-care process. This means that health-care services must maintain systems that provide full accessibility to physicians, clinicians, and patients respectively.

Legacy health records and medical delivery systems were never designed for transparency and portability. Actually, they were designed precisely with the opposite intent. The result has been a collective system that isolates information from the people who need it to make faster, better decisions.

This chaos literally costs billions of dollars annually in bloated health -are expenses.


For example, today a hospital can easily develop better patient information management that gives better control over the dissemination of patient data and expedites decision making, resulting in:

Reduced patient errors through electronic physician order entry.

Elimination of transcription errors.

Reduced pharmacy errors because all prescriptions are sent electronically.

Reduced dosing errors in pediatrics, where dosing is calculated by weight and age.

Having fewer patient errors means lower costs and better outcomes.

The Promise of Tomorrow

We are accustomed today to seeing twice as many office staff as medical personnel in a doctor’s office. That will change. There will be fewer visits to the doctor; information will be exchanged electronically. There will be fewer repeat tests. Doctors on rounds in a hospital will have everything they need to know in a small device hanging on their belts. Patients will have access to their medical records online, and so will the emergency room. But all this will require change, and change is not easy.


Actually, we already have the technology we need. For example, we already have EHRs, electronic health records, which capture every piece of information about a patient and are accessible to qualified medical personnel online. In an emergency, the patient doesn’t have to remember drugs he’s taking and nobody has to track down a manila folder.

Nevertheless, when studies indicate that only about half of all patients get widely accepted and uncontroversial advice from their doctors–such as taking aspirin for heart conditions–it’s time we consider something new. Moreover, if we had a national, intraoperative, medical information network, we would be able to see patterns in the aggregate data. We could learn, for example, whether a certain test is actually worthwhile in a certain situation. The quality of health-care would go up and the cost would go down.

Although some progressive health-care providers have begun to transition to digitization, enabling faster and more complete access to patient data, we still have a long way to go toward achieving seamless process and business innovation in health care.