Healthcare leaders are leveraging startup innovation to hold off new entrants and spur growth

The rate of innovation in our economy is faster than ever, but healthcare organizations are still slow-moving. While the industry has come a long way and technology has advanced, providers are often plagued by significant bureaucracy and massive workforces that are difficult to shift from the status quo. As disrupters descend on the industry in the name of efficiency, healthcare executives must consider what they can do to compete and differentiate their organizations. A first step is to look at the healthcare process from the lens of the consumer.

Aaron Martin, executive vice president and chief digital officer at Providence St. Joseph Health, noted that, in any value chain, the only people who matter are the fundamental creators and the fundamental recipients. In his previous work at Amazon, those stakeholders were the book authors and the book readers.

Amazon’s disruption of the book industry was the result of collapsing every middleman between those two parties, the publishers, the distributors, and even the bookstores. As Amazon launched one solution after another, the “friction” that separated the author from the reader dissolved. Aaron’s use of the word “friction” adds color to the idea of unwarranted redundancies and added steps that make the connectivity of the creator with the recipient irritating, complicated and unfriendly.

Martin proposed that healthcare leaders should strive toward this model by removing the obstacles and middlemen between clinicians/caregivers, who are our fundamental creators, and patients, who are our fundamental recipients.

“Everyone else is not necessary,” Martin said. “They just cause friction. Not to sound too diabolical, but if you’re not removing friction, you’re not doing a good job.”

Martin’s team is working with existing startups and developing new ones that offer solutions to key challenges that impact the Quadruple Aim, with a focus on what the health system calls the “sacred encounter:” the doctor-patient relationship.

“It’s not a customer service relationship,” Martin said. “We think there is something different happening there that is vastly more important—it’s professional advice combined with something spiritual. So, how do we eliminate friction?”

Providence is among a number of health systems investing in startup-style innovation. For Peoria, Ill.-based OSF Healthcare, it has been crucial to not only invest in great ideas, but also encourage them from within.

Through its $75 million investment fund, OSF has invested in startups that resolve gaps in care, including partnerships with Regroup, a virtual behavioral health platform and SilverCloud, a digital tool that conducts behavioral health assessments. Both allow the system to bridge access to rural patients who may have trouble accessing behavioral healthcare, according to Michelle Conger, chief strategy officer of OSF HealthCare and CEO of OSF Saint Gabriel Digital Health. The system’s Office of Innovation Management encourages and assists clinicians to bring their own solutions to reality, through intellectual property assistance, in-house prototyping and other services.

Much of the innovation happening in health systems is an effort to stave off nontraditional competitors like Walmart, CVS Health and urgent care operators, who attract digital-savvy commercial patients seeking convenience. “If commercial patients go away, we’re not going to be able to deliver on our mission to serve the poor and vulnerable. You have to protect that business,” Martin said.

Amy Perry, CEO of Atlantic Health System’s (AHS) hospital division and senior vice president of integrated care delivery, echoed this sentiment during her presentation: “To make investments in patient’s health, we need to access the total premium dollar. And as doctors and hospitals reduce costs, we need to ensure that these savings are passed on to the consumer improving affordability instead of increasing insurance carrier profits.”

AHS is supporting the commercialization of companies that align with their strategic priorities. The health system has been highly rated for the quality of its clinician-patient relationships and is using that as a starting point for much of its own innovation efforts.

“Our mission is why we exist—we do not exist for shareholder value,” Perry said. “We exist because we care for our communities, and it’s a good thing to get behind.”