Ask people what is wrong with the healthcare system and you’ll get 10 different answers. But if there’s one thing that everyone can get behind it’s that we need to accelerate innovation and cut costs in the healthcare sector.
Why exactly do we continue to shell out so much more than the rest of the advanced world, while seeing worse outcomes? A large driver of ever-spiraling healthcare costs is waste, which some analysts peg at more than $1 trillion, or a quarter of total spending in the sector.
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Shiva Mirhosseini Shiva Mirhosseini is a marketing technology executive and the founding partner of Paving the Path consulting, a boutique technology and strategy advisory firm. As part of that role, she also hosts the Paving the Path podcast.
Many leaders talk about reducing waste through innovation, new tools, and digital transformation. I’ve heard no shortage of great ideas pitched for new products, services, and approaches, and there’s no lack of capital available for those solutions, as anyone who has been on the conference circuit can attest to.
The opportunity in front of us is significant – the transformation of how we deliver care could unlock as much as $420 billion to $550 billion in total savings.
But the US healthcare system faces the chronic challenge of scaling innovation to curb costs.
If we have the ideas, the capital, and the motivation, then what’s the problem? It’s the sluggish speed of disruption.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
The venture capital giant Andreessen Horowitz helped popularize the concept of “the great unbundling,” noting how successful platforms like Craigslist, Amazon and eBay over time become fragmented and vulnerable to competitors able to build out better vertical slices of those platforms.
The same phenomenon is starting to play out in healthcare; witness the impact of SaaS gobbling up huge shares of the healthcare market. Amid this unbundling, the partner ecosystem takes on heightened importance. Finding the right partner is often a much faster path to success and ultimately disruption than going it alone.
Large incumbents once owned the entire technology stack, but those days are rapidly ending as they seek to outsource more functions. Much of this change was driven by the Affordable Care Act, which served to accelerate existing trends toward greater patient-centricity and virtual care.
The future is clearly in value-based medicine, driven by data, analytics, and greater interoperability. This creates new opportunities for entrepreneurs, as well as incumbents seeking new solutions for vexing challenges, whether it’s early detection of diabetes or encouraging patients to be more consistent in taking their medication.
In borrowing a page from SaaS and PaaS strategies, we can see that the best way to attract partners is to effectively position one’s platform as a viable solution to a clear problem. Articulating that value proposition requires the ability to clearly communicate how a technology offering fills an urgent need and reduces risk on the path to commercialization.
The real opportunity in this unbundling moment is that start-ups and incumbents can draw from one another’s strengths. Many start-ups lack access to the market and the capacity to fully run with their ideas; meanwhile, incumbents are lacking mechanisms to absorb, test, and scale innovative ideas. And for all of the resources that incumbents have, they often struggle with inertia, as we see when healthcare giants take years to undergo projects like cloud transformation that are table stakes in today’s environment.
In short, we need to embrace an ecosystem approach.
An Accenture survey found that some 76% of business leaders believe partner ecosystems will be the main disruptor to current business models, including and beyond the health sector. McKinsey predicts that by 2025 ecosystem approaches will drive a $60 trillion economy worldwide.
At the end of the day, customers have needs and want to address as many of those needs as efficiently as they can. And when enterprises work together across an ecosystem as partners, they are better enabled to collaborate to offer complementary services and value-adds to meet those needs.
It’s exciting to see the paradigm shift underway from technology point solutions to health-tech ecosystems. But realizing the full potential of ecosystems will require upfront work; it will demand a cohesive and incentivized approach that engages a diverse array of internal and external stakeholders, as well as a technically sound foundation and efficient processes.
As proud as founders and entrepreneurs may be of their ability to forge new solutions, they can go much farther by partnering with each other. By pooling insights and solutions, start-ups can better plug in the missing gaps in the puzzle that incumbents seek help plugging.
From my perspective, an ecosystem approach offers benefits in three key areas: product, go-to-market, and servicing.
By partnering with complementary companies in the same ecosystem, a company can enhance its product offerings to its target audience. For example, if a start-up offers women’s health and lactation services after delivery, and another company offers telehealth services for postpartum depression, they can join forces to offer a more robust package to a vulnerable audience at a critical time in their lives. This can result in a more compelling product that appeals to customers and the market.
The go-to-market strategy for a start-up may involve, say, selling its services to insurance companies, which is a more cost-effective option than trying to reach consumers directly. However, to actually make money from these contracts, the company must convert insurance company members to use its product. By partnering with other companies in the same ecosystem, the start-up can leverage the visibility of those companies and cut the cost of going to market by half or more. This can result in a more powerful and compelling product to sell to insurance companies.
By partnering with other companies in the same ecosystem, the start-up can better service its customers. Instead of offering a single product or service, the company can offer a more robust package of services, which is more attractive to customers. Additionally, the company can automate its business and software processes to offer better and more efficient services to its customers.
Our challenges in the health space are too daunting for any single organization to tackle alone. We need to draw from both the strengths of the incumbents and the start-ups that have emerged in recent years, whether the challenge is in navigating care, simplifying care delivery, or fostering stronger patient engagement. By partnering with complementary companies in the same ecosystem, a company can become more powerful and appealing to the market and its customers.
Photo: alphaspirit, Getty Images
Shiva Mirhosseini is a marketing technology executive and the founding partner of Paving the Path consulting, a boutique technology and strategy advisory firm. As part of that role, she also hosts the Paving the Path podcast.
