Column | Innovation and Disruption

Want to foster innovation in healthcare? Give it a foster home

Column | Innovation and Disruption

Want to foster innovation in healthcare? Give it a foster home

Being an innovator in healthcare is not for the faint-hearted. The risks of failure are great, particularly for a health system that put its limited funding and resources on the line to develop an innovative project that holds promise but offers no guarantee of success.

There is a way to mitigate the risk, while still enjoying the benefits, of a successful innovation. Instead of developing innovative projects on their own, healthcare organizations may find fostering innovation in others brings rewards that make it worthwhile.

Fear of failure or slow returns

Organizations shy away from innovation because of the political risks from its not meeting expectations — or just plain failing. It takes a lot to make a business case for committing resources to try something unproven and then marshalling resources to deliver on the promise. Many healthcare organizations are not willing to take the risk even if an idea has merit on paper.

The same short-term need for returns we see with capital investments can also be a challenge. We must be attentive to margins and to reaping returns on invested resources in the new innovation.

A different mindset

These concerns are reasonable. But there’s a way to strike a balance. Instead of “parenting” an innovation, you could “foster” it. Many startup companies have the entrepreneurial spirit to take a risk and develop innovations to improve care. Many are working to address the challenge of patient engagement that providers struggle with in their population health strategies, for example. Others are providing transportation services to help patients with follow-up appointments that help prevent readmissions. What many of these organizations require besides entrepreneurial spirit, however, is a laboratory to develop and refine the concept.

An organization that wants to be innovative, but at a reduced risk, could benefit from identifying a partner that can foster its innovative idea. Working with a start-up to pilot a new idea, for example, can allow the organization to avoid initial legwork needed to develop the idea, while preserving capital for other patient care investments. An entrepreneur that believes in the innovation can take the lead — and perhaps do it better because they are independent and unfettered by biases or limitations that exist within a larger organization.

If your leadership team sees value in community relationships, for example, then incentivizing development of new patient care innovations in the community could further that value. With such a partnership, you would simply define the problem and the needed solution and let your community lead the innovation. Many local businesses, colleges and entrepreneurs are ready to step in and help solve the challenges of delivering care.

Here are just two options to consider.

Seek connections with an innovation ecosystem. Such an organization may be working in your state or region on solutions to problems of interest to healthcare organizations (see for example, the sidebar on the next page).

A good way to build a relationship with these organizations is by mentoring them to help them refine their healthcare-related ideas. They might assume that healthcare organizations are paid billed charges and that revenues aplenty therefore await development of their ideas. Helping entrepreneurs understand the structure and financing of the healthcare business enables them to separate good ideas from the unpromising ones and then shape those ideas into truly viable solutions to healthcare’s challenges.

Making such connections and sharing insights doesn’t mean discouraging entrepreneurs from testing ideas just because we don’t think they are possible. A fresh set of eyes could bring some valuable new insight for a business solution that may not have occurred to us.

Develop your own innovation ecosystem. This could be a good project for an underused project management office (PMO), where you could simply identify your needs and then let the PMO see what entrepreneurs can rise to the challenge. You could even make a small investment in the ideas and let your PMO manage the details. A relationship with a local university could open the door to resources for developing concepts.

Preliminary considerations

Before embracing such an approach, it is important to ask questions to validate your readiness:

  • Do we have the management resources who can be freed up to lead the cooperative relationship with an external entrepreneur? (This would be a great assignment for an administrative resident, if you have one.)
  • Do we have managers who can take time to share ideas with an entrepreneur and then work with them on a pilot study?
  • If the project needs capital, can we make a capital investment without violating our existing investment policies?
  • Will our board support such a community partnership, even if it does not yield immediate profits or could see an initial downside loss?
  • Do we have a culture that will allow us to use the failure of one idea as a learning experience for redefining it so we might ultimately achieve a solution?

Boldness is a key ingredient

Fostering innovation this way is not easy, and it is not for everyone. But for the right organization and the right idea, providing a pilot site for an entrepreneur can create a viable path to innovation. Establishing a foster home in your organization for innovators seeking support  to grow and succeed may be the best way you become a force for healthcare innovation. 


Fostering innovation: A case example

The Prime Health collaborative in Denver is an example of a healthcare innovation ecosystem that helps organizations with intriguing healthcare delivery ideas get those ideas on their feet and ready for market. Resources available to healthcare innovators through the ecosystem include an innovation academy, funding for services, support for healthcare entrepreneurs, a summit meeting with state government leaders and industry executives to provide insights on policy directions, and help for innovators to make connections with venture capital investors.

The collaborative has hosted a competition for the past eight years where several dozen start-up companies vie for mentoring from other entrepreneurs, consultants and industry leaders to refine their ideas and their investor “pitch.” They then compete for seed money provided by local foundations to help bring those ideas to life. The next step is to identify a place to develop the proof of concept and a business case. The partnerships that emerge from this process can be rewarding for both the startup and the organization that hosts a pilot test of the innovation.


About the Author

Jeff Helton, PhD, FHFMA, CMA,

is clinical professor of healthcare fi nance in the University of Colorado Denver Business Schoo

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