INNOVATION IN HEALTHCARE

A PROJECT REPORT ON

INNOVATION IN HEALTHCARE

SUBMITTED BY
MR. ABHISHEK NANDALAL MISHRA
ROLL NO: 166030
M.Com. SEM- III
(ADVANCE ACCOUNTANCY)
ACADEMIC YEAR: 2016-17

Under the guidance of PROJECT GUIDE

PROF. MARY VIMOCHANA

SUBMITTED TO UNIVERSITY OF MUMBAI

MULUND COLLEGE OF COMMERCE
S N ROAD, MULUND (WEST)
MUMBAI 400080

INNOVATION IN HEALTHCARE

Declaration from the Student

I, ABHISHEK NANDALAL MISHRA R. No. 166030 Student of Mulund College Of
Commerce, S. N. Road, Mulund (West) 400080, studying in M.Com Part- II hereby declare
that I have completed the project on INNOVATION IN HEALTHCARE under the guidance
of project guide Prof. MARY VIMOCHANA during the academic year 2016-17. The
information submitted is true to the best of my knowledge.

Date:

Signature

Place:

INNOVATION IN HEALTHCARE

CERTIFICATE
I, Prof. M. S. GANAGI, hereby certify that MR. ABHISHEK NANDALAL MISHRA
R.No. 166030 of Mulund College of Commerce, S. N. Road, Mulund (West), Mumbai
-400080 of M.com Part II (Advanced Accountancy) has completed her project on
INNOVATION IN HEALTHCARE during the academic year 2016-17. The information
submitted is true and original to the best of my knowledge.

____________________

___________________

Project Guide

External guide

_____________________

___________________

Co-coordinator

Principal

Date:

ACKNOWLEDGEMENT

INNOVATION IN HEALTHCARE

I would like to express my sincere gratitude to Principal of Mulund College of

Commerce DR. (Mrs.) Parvathi Venkatesh, Course - Coordinator

Prof. Rane and our

project guide Prof. Mary Vimochana, for providing me an opportunity to do my project

work on INNOVATION IN HEALTHCARE. I also wish to express my sincere
gratitude to the non - teaching staff of our college. I sincerely thank to all of them
in helping me to carrying out this project work. Last but not the least, I wish to avail
myself of this opportunity, to express a sense of gratitude and love to my friends and
my beloved parents for their mutual support, strength, help and for everything.

PLACE:

Signature

DATE:

INNOVATION IN HEALTHCARE

INDEX
ABSTRACT..........................................................................................................................................7
OBJECTIVES.......................................................................................................................................9
INNOVATION IN HEALTHCARE: WHY ITS NEEDED.................................................................10
TRENDS SHAPING THE HEALTHCARE INDUSTRY...................................................................13
TECHNOLOGICAL INNOVATIONS IN HEALTHCARE.................................................................17
INNOVATION IN HEALTHCARE DELIVERY SYSTEM................................................................24
INNOVATION IN MARKETING STRATEGIES...............................................................................29
CHALLENGES IN INNOVATION IN HEALTHCARE INDUSTRY................................................32
RECOMMENDATION FOR INNOVATIVE AND SUSTAINABLE HEALTHCARE.......................34
CONCLUSION...................................................................................................................................36
REFERENCES....................................................................................................................................37

INNOVATION IN HEALTHCARE

INNOVATION IN HEAL

INNOVATION IN HEALTHCARE

ABSTRACT
The healthcare industry has experienced a proliferation of innovations aimed at enhancing
life expectancy, quality of life, diagnostic and treatment options, as well as the efficiency and
cost effectiveness of the healthcare system. Health care organizations are finding their own
moments of truth where they engage in new thinking about their customers. Whether these
moments are prompted by inspiration from other industries, competition, health reform,
consumer demands or the bottom line, agile companies are changing the way they get to
know their customers, moving beyond basic transactions and embracing their patients.
Several service industries outside of healthcare are helping shape healthcare consumer
experiences and expectations. Todays technologically savvy consumers are more apt to do
their own research when selecting a doctor, investigating treatment options, and making
major health care decisions. Targeted marketing also enables us to tailor communications to
each stage of the member relationship. In this project I will inspect such Innovations in the
healthcare sector Globally and in the Indian economy.
In healthcare, the term innovation has traditionally been reserved for the development of
new therapies, drugs, or medical devices. As both private and public efforts to reform the
healthcare system gain momentum, it is clear that innovation must be explored in a broader
context, one that examines previously underdeveloped opportunities in areas such as data
analytics, consumer behaviour, provider incentives, and process improvement in care
delivery.
This project highlights the Technological Innovations in Healthcare, Innovations in the
Marketing Strategies, Innovation in Healthcare Delivery system, Financing and Costing of
Healthcare, Innovation and Development in Indian Healthcare, and the Challenges in
Innovation in Healthcare Industry and Recommendation for Innovative and Sustainable
Healthcare.

INNOVATION IN HEALTHCARE

Healthcare, of course, has more than its share of very complex questions. How can we
reduce costs and increase value, improve patients experiences and outcomes, speed the
translation of research into therapies and cures, make healthcare something that people can
have access to here in the United States, and, ultimately, around the world? If we widen the
boundaries of inquiry to address questions of this sort, we discover the importance of
collaborations and partnerships across the industry and across the related academic fields.
In spite of all the dramatic enhancements in digital connectivity and communication, there is
something uniquely powerful and generative about bringing thinkers and doers together to
interact in person.

Drew Gilpin Faust, President, Harvard University

INNOVATION IN HEALTHCARE

OBJECTIVES
The objective of this study is to identify:

Need for Innovations in Healthcare

Trends in Innovation in Healthcare Industry
Technological Innovations in the Healthcare
Innovation in Healthcare Delivery system
Innovation in Marketing Strategies
Challenges in Innovation in Healthcare Industry
Recommendation for Innovative and Sustainable Healthcare.

INNOVATION IN HEALTHCARE

INNOVATION IN HEALTHCARE: WHY ITS NEEDED

Over the past several decades, thanks to improved diagnostic and therapeutic options,
healthcare has experienced an explosion of innovations designed to improve life expectancy
and quality of life. As healthcare organizations face unprecedented challenges to improve
quality, reduce harm, improve access, increase efficiency, eliminate waste, and lower costs,
innovation is becoming a major focus once again. Under our present system, just doing our
best or working harder will not be enough. The healthcare industry is on the brink of massive
change.
There are many forces driving the need for innovation. The traditional encounter-based care
delivery model is being overwhelmed as a result of the growth in demand driven by retiring
Baby Boomers and the rapidly increasing prevalence of chronic disease. There are looming
shortages of key providers. Costs are too high and rising. Even our productivity is suffering.
A McKinsey study[1], from February 2014 demonstrated that the productivity of the U.S.
healthcare industry dropped by 0.8 percent annually in the 1990 to 2007 period, while the
productivity of the U.S. computer and semiconductor industry grew by 7.6 percent each year.
These factors, plus additional socioeconomic forces, mandate a focus on innovation.

1990-2007
10
8

1.4

6
4
Axis Title

7.6

7.2

2
1.2
-0.6

0
-2

-2.3

-0.7

-0.8

-4

[1] Disruptive Change, Page 17 - http://healthcare.mckinsey.com/sites/default/files/MCK_PayorBook_13-24_DisruptiveChange_R5.pdf

10

INNOVATION IN HEALTHCARE

HEALTHCARE INNOVATION DEFINED

The Department of Commerce Advisory Committee on Measuring Innovation in the 21st
Century Economy has defined Innovation as the design, invention, development, and/or
implementation of new or altered products, services, processes, systems, organizational
structures, or business models for the purpose of creating new value for customers and
financial returns for the firm. [2]
Viewed comprehensively, innovation represents the implementation of new or significantly
improved products, services, or processes. It can also imply new organizational models,
methods of service delivery, ways of relating to customers, and approaches to marketing.
Innovation can be categorized by its impact on stakeholders as either non-disruptive or
disruptive. Non-disruptive innovation, also referred to as evolutionary, incremental, linear, or
sustaining innovation, improves something that already exists in a way that supports the
realization of new incremental opportunities or solves known issues. Disruptive innovations,
also called radical, revolutionary, transformational, or exponential innovations, refer to
innovations that fundamentally disrupt old systems, create new market constituents and new
markets while marginalizing old ones, and deliver dramatic new value opportunities to those
who successfully implement and adapt to the innovation. A compelling case can be made that
healthcare will experience substantial disruptive innovation over the next few years.

MORE DISRUPTIVE INNOVATION IS NEEDED

In recent decades, the majority of innovation in healthcare has been centred on the
development of new diagnostic procedures, therapies, drugs, or medical devices
something the U.S. has excelled at over the past few decades. These advances range from
new pharmaceutical agents and procedures (e.g., stents) to more precise diagnostic scanners
and surgical robots. While these innovations have produced some stunning results, they have
been relatively narrowly focused and mostly incremental in nature.
Going forward, the emphasis on innovation promises to accelerate rapidly and produce
exponential change in important areas including prevention, more personalized care tailored
specifically to a patients genetic profile and needs, more efficient and proactive technologyenabled care models, more integrated and comprehensive delivery organizational designs,

11

INNOVATION IN HEALTHCARE

[2] Innovation Measurement, Page 3 - http://www.esa.doc.gov/sites/default/files/innovation_measurement_01-08.pdf

and additional creative technology-enabled options for effective health encounters (e.g.,
patient to provider, provider to provider, and patient to patient).
Over the past two decades, innovation has become critical to economic growth and progress
in all industries. To the casual observer, technology-induced innovation can seem random and
linear, but if one stands back, a more dramatic pattern becomes apparent. The pace of
innovation is accelerating exponentially and often is exogenous to the economy.
Entrepreneurs and scientists do not think or create more slowly during recessions. Innovation
is often easier during downturns and difficult times.
When it comes to health care service delivery, patients, payers, and politicians are asking for
improved results: better access, faster diagnosis and treatment, more convenience, greater
sensitivity to cultural differences and health disparities, and so on. But if we continue to do
what we've always done, we will get the results we have always gotten. Nor is it enough to
merely pursue incremental improvement. The challenges we face today call for more novel
approaches in other words, innovation.

12

INNOVATION IN HEALTHCARE

TRENDS SHAPING THE HEALTHCARE INDUSTRY

Here are some healthcare trends shaping the industry in 2016 as per PwC HRI survey report
2015[3], which helped identify major players in Innovation in the overall Healthcare sector.
2016 YEAR OF MERGER
By mid-year 2015, nearly $400 billion in agreements in healthcare deals had been announced,
breaking records set the previous year. Unconventional partnerships across the industry
should dominate 2016 as well.
Insurers will take centre stage as they look to boost negotiating power and seek competitive
advantages such as diversified revenue streams from new products, the optimization of IT
infrastructure and powerful data analytics.
Additionally, collaborations between independent hospitals and clinician groups/top tier
health systems will generate more consumer touchpoints.
DRUG AND TREATMENT PRICES
Drug pricing has reached a peak in the U.S. With the rise of high-deductible healthcare plans,
consumers are likely to become increasingly frustrated with those high prices. Under threat of
strong government action, pharmaceutical companies may contemplate new models in 2016.
Consumers are also not aware of such pricing, a survey conducted by PwC reveals that
consumers dont even have conversations with the hospital authorities in regards to the
treatment pricing and procedural cost. Figure below shows percentage of consumers unaware
of the pricing model.

13

INNOVATION IN HEALTHCARE

[3] PwC HRI Report 2015 - https://www.pwc.com/us/en/health-industries/top-health-industry-issues/assets/2016-us-hri-top-issues.pdf

Source: HRI Consumer survey, PwC 2015

MOBILE HEALTH APP

Consumers are not only using their smartphones and tablets for health monitoring, but also to
provide anywhere, anytime diagnosis and treatment in 2016. From "bed less" hospitals to
smartphone medicine, care can and will increasingly be delivered remotely. PwC's HRI found
the percentage of consumers with at least one medical, health or fitness app on their mobile
devices has doubled, from 16 percent in 2013 to 32 percent in 2015. In addition, 60 percent of
consumers surveyed are willing to have a visit with their physician using their mobile device.

Consumer w ith Health App

35%

32%

30%
25%
20%

16%

15%
10%
5%
0%

2013

2015

Source: HRI Consumer survey, PwC, 2013, 2015

MEDICAL TOURISM
Percentage of consumers who are willing to make the following trade-offs to receive services
from a health system recognized as best in field.

14

INNOVATION IN HEALTHCARE

Source: HRI Consumer survey, PwC 2015

Medical Tourism and Healthcare Statistics from Around the World

THE NEW MONEY MANAGERS

In 2016, consumers will begin to manage their health spending like they manage their
retirement savings, according to PwC's HRI. As this trend occurs, companies may try to find
new ways to solve payment problems. This could include bundling innovative financing with
other offerings. For example, healthcare payment and billing will be embedded into broader
consumer experiences, similar to the way other industries link spending to rewards, offering
frequent flier miles, discounts or points. These models will cater to what consumers want
convenience and value.
BEHAVIOURAL HEALTHCARE

15

INNOVATION IN HEALTHCARE

Behavioural health will be a key issue in 2016, as one out of five American adults
experiences a mental illness every year. These conditions cost businesses across the nation
more than $440 billion annually. Employers and healthcare organizations may address
behavioural healthcare to keep costs down, productivity up and consumers healthy.
CARE MOVES TO THE COMMUNITY
Reducing health costs has been part of the healthcare conversation for years. But with
mounting budget pressures, health systems in 2016 may pursue lower-cost care settings more
aggressively and creatively than before. For instance, in the past 24 months, five out of the
top 15 academic medical centres have acquired community hospitals.
PwC's HRI also estimates the rise of retail clinics will continue next year. Seventy-four
percent of clinicians surveyed believe these types of non-traditional venues improve access to
care. Sixty-seven percent of consumers who have used retail clinics were "very satisfied"
with their experience.

NEW DATABASES IMPROVE PATIENT CARE AND CONSUMER HEALTH

High hopes surrounding big data investments in healthcare may have been unrealistic in the
past. Converting large and diverse datasets into practical insights is a large challenge for any
hospital or health system. But in 2016, with the emergence of "non-relational" databases, this
could all change and hospitals and health systems may finally be able to use the large
quantity of data they have collected.
Traditional relational databases organize data into columns, rows and tables, forcing
information into predetermined categories. While these databases are ideal for information
that is easily structured, they cannot handle information such as clinician notes, transcripts
and other unstructured data as easily. Newer "non-traditional" databases make it easier to
bypass the rigid structure and analyse many different forms of data together.
THE MEDICAL COST MYSTERY
Health systems command billions of dollars in revenue, but they often can't identify the cost
of the services they provide. That may change in 2016, as stakeholders push for value. "This
will be more than just an exercise to control spend it could help uncover opportunities to
become more efficient and improve care," PwC's HRI researchers wrote.

16

INNOVATION IN HEALTHCARE

So these are the various trends in the Healthcare Industry, now lets go deeper into the various
Innovations that will drive these trends and shape a sustainable healthcare industry.

17

INNOVATION IN HEALTHCARE

TECHNOLOGICAL INNOVATIONS IN HEALTHCARE

Increasing service costs and the compulsion of providing healthcare to all sections of the
society irrespective of their purchasing power are two major challenges that healthcare
industry is confronted with. In a situation where costs defy the business logic of serving
patients with generosity, information technology (IT) has come as a boon to the industry.
IT plays a core role in almost every healthcare area. Be it providing quality services to the
patients at reduced cost, maintaining patient history, adjudicating payer claims, providing
referral and pre-certification services, case management, digital imaging of paper forms or
generating electronic medical records (EMRs) for speedy and accurate processing of
information, IT is playing a commendable role in the healthcare industry. With IT, healthcare
service offerings are becoming more predictable and manageable and thus the industry is
experiencing stability and a steady transformation.
[4] Conference Board of Canada, Exploring Technological Innovation in Health Systems, August 2007.

According to the Conference Board of Canada Technological Innovation in Healthcare can be

defined as, the transformation of scientific and engineering creations into new medical
devices, drugs and biologics, health-care information technologies, and medical and surgical
procedures, all of which bring social and economic value. [4]
The healthcare industry faces the dilemma between pursuing the competitive advantage of
cutting edge technology and the risk of uncertainty associated with it. There is a need to have
a trade-off between bringing in sufficient level of technological innovations to provide
quality services at lesser cost and managing the risks/uncertainties it leads to.
Bringing about technological innovation is easier said than done. IT and funding support
notwithstanding, organizations need to realize that it is a larger level of acceptability by
relevant stakeholders that accelerate their innovation cycle. If people, technology and
processes that form the backbone of businesses are receptive to the inherent change that
innovation brings about, the challenge of compressing innovation cycles can be easily
countered. It is ironical though to see that it is the people, technology and processes that are
the actual change agents but are the first to get impacted by the change that they bring about.
But who and what are these entities in the healthcare sector that impact and get impacted by
innovation?

18

INNOVATION IN HEALTHCARE

People include patients, providers (physicians/hospitals), business sponsors, end users, claim
processors, clinical staff, clearing houses, software vendors audit/compliance personnel,
underwriters, policy makers, plan sponsors/employers, insurance agents/ brokers, etc.
Technology includes insurance company systems (member enrolment systems, plan sponsor
information maintenance system, insurance product system, claim processing engines, patient
management systems, provider services systems, patient/plan sponsor support applications,
etc.); provider systems (physician systems, hospital management applications); vendor
systems to submit claims on behalf of providers; government systems to regulate healthcare
industry and perform audits of insurance companies and providers, etc.
Process includes member enrolment process, underwriting process, insurance product setup
process, claim processing, claim submission process, claim intake process, patient services
process, hospital management processes, etc.
In the current state business where there are overlapping industries, technologies depend on
each other. One innovation is dependent on another. Most of the times industries do not factor
in the technological progresses while evaluating other technologies. For example, EMRs in
healthcare cannot happen until the infrastructure is improved in terms of storage and
performance. One innovative idea that might have seemed impossible at one point in time
might become a reasonable commercial product with technological advancements in a couple
of years as a result of other complementary innovations. Often the impact of an innovation
depends on complementary inventions.
Below are some of the technological innovation in the healthcare industry.
DIAGNOSTIC TECHNOLOGIES
The health care industry is amenable to disruptive innovation because the technologies,
business models and potential value networks capable of driving that innovation are already
in place.
Old-fashioned medicine relied on the intuition of costly specialists who had extensive
training and lengthy experience, enabling them to recognize patterns and intuitively arrive at
diagnoses. However, new technologies now make it possible to pinpoint the causes of a
disease through imaging, molecular biology and other diagnostic approaches, thus replacing

19

INNOVATION IN HEALTHCARE

intuitive medicine with precision medicine. In the past, treating diseases was a more
profitable business for pharmaceutical companies and health care providers than diagnosing
them. In the future, that could very well change. Diagnostics probably will come to the fore.
Diagnostic technologies have already changed the treatment of most infectious diseases from
intuitive to precision medicine. In recent years, the emergence of molecular diagnostics and
imaging diagnostics has made medical diagnosis and treatment even more precise. Advances
in genomics and proteomics promise even greater precision, as well as personalization, of
clinical diagnoses and treatments.
ADVANCES IN INFORMATION/COMMUNICATIONS TECHNOLOGIES
The second technological enabler, advances in ICT, not only supports precision medicine by
enabling the development of increasingly precise techniques and devices and the capture and
integration of clinical data for research purposes. They also facilitate the codification,
continuous updating, and diffusion of precision therapies or best-practice care protocols
based on advancing medical knowledge.
ICT can make feasible the integration of a patients health care data with a continuously
advancing medical evidence base to provide real-time medical decision support to
professional care providers, as well as to patients and their families. ICT also enables the
collection, integration, and analysis of data on the performance of the overall system and
supports the use of many advanced systems design, analysis, and governance tools and
methods to improve system performance.
PERSONAL HEALTH RECORD (PHR)
Since 1960, efforts have been made to encourage the use of electronic records, but
implementation has been limited mostly to integrated multispecialty group practices. One of
the most promising disruptive information technologies, the personal health record (PHR),
has advanced efforts to put electronic medical records in place throughout the health care
system. Omid Moghadam, director of PHR programs at Intel, describes a PHR as a record
owned and controlled by the patient that incorporates data the patient enters, but also
includes authenticated information from all of the places the patient is involved with
insurance company, hospital, doctors offices, labs, and so forth (Harvard Medical School,
2006).

20

INNOVATION IN HEALTHCARE

Some companies have already adopted PHRs for their employees, and some insurers are
using them to try to retain customers. Even Microsoft and Google are competing for PHR
business. The hope is that by bringing together an individuals medical information from all
relevant sources, that individual will be in a better position to manage and control his or her
medical care. Widespread use of PHRs could create an informed consumer base that can
begin to buy health services directly, rather than through third parties. PHRs are diffusing
very rapidly from academic environments to academic-corporate-consortium partnerships,
and recently to the commercial world (e.g., Microsoft HealthVault).
DEVELOPMENTS IN TECHNOLOGY ENABLED CARE SERVICES
Connected health or technology-enabled care (TEC) is the collective term for telecare,
telehealth, telemedicine, mHealth, digital health and eHealth services. TEC involves the
convergence of health technology, digital media and mobile devices and is increasingly seen
as an integral part of the solution to many of the challenges facing the health, social care and
wellness sectors, especially in enabling more effective integration of care. TEC uses
connected, medical devices to deliver quality healthcare and includes software, such as health
applications, and hardware including mobile diagnostics, remote monitoring devices and
wearables.
Globally, there are cultural and regulatory barriers to the adoption of TEC, the extent of
which varies from country to country. However, the increasing capability and decreasing
costs of the technology means that financial barriers are becoming less of a concern.
There is a growing body of research showing that TEC, in particular mobile and digitally
enabled technology, has the potential to reduce healthcare costs, increase access and improve
outcomes. The power and reach of the technology can improve access, overcome geographic
distance and shortages of HCPs, while providing a more versatile and personalised approach
to healthcare.
mHEALTH
Digital and mobile health (mHealth) have a wide range of uses, from chronic care
management to complex population health analysis. As healthcare shifts towards a patientcentred, outcome-based delivery model, mHealth will be an important partner in healthcare
transformation. The success of this partnership, however, will be the willingness of key
stakeholders to embrace mHealth. There is also a need for a robust business case to convince

21

INNOVATION IN HEALTHCARE

commissioners and providers that their involvement and investment in the technology is
worthwhile.

GROWTH IN NUMBERS AND TYPES OF WEARABLE DEVICES

Another key development is the growth in wearable technology, and in particular, bio-sensing
wearables. These devices include fitness bands, digital hearing aids, blood pressure monitors
and ingestible devices such as smart pills. Recent innovations include clothing/textiles
impregnated with sensors. Most wearable healthcare devices transmit data via an app. The
global movement in TEC is the catalyst for the development of wearables.
There are three main characteristics currently impacting the development of wearables:

wearables work well only in conjunction with software (such as apps)

there is a clear demand for monitoring devices that are unobtrusive and easy to use,

and do not interfere with normal life

there are a large number of small companies designing and developing wearable
devices, and the market is highly fragmented.

22

INNOVATION IN HEALTHCARE

CONNECTED PATIENTS
Mobile technologies can empower patients and carers by giving them more control over their
health and social care needs and reducing their dependence on HCPs for information about
their health.
Technological advancement can help:

improve self-management through education, remote monitoring and treatment

adherence
tackle areas of high unmet need that traditional approaches have struggled to address,

such as mental health

support development of online patient portals and patient communities
shift the balance of power and transform the relationship between the patient and
carer to one focussed on co-creation.

23

INNOVATION IN HEALTHCARE

24

INNOVATION IN HEALTHCARE

INNOVATION IN HEALTHCARE DELIVERY SYSTEM

Nearly all nations are working to improve their healthcare delivery systems. The growth of
chronic illness and aging populations, in particular, has placed a substantial burden on
healthcare systems in both developed and developing countries. For example, 60 percent of
all deaths worldwide (25 million people) are due to chronic illness. Eighty percent of these
occur in low and middle-income countries, and deaths due to chronic illness are double the
number due to infectious diseases. Chronic illnesses also have a huge economic impact. For
example, over the next ten years, chronic illness will result in $558 billion of costs as well as
lost productivity in China; $237 billion in India; and $33 billion in the United Kingdom. In
the US, nearly three-quarters of Americans over the age of 65 suffer from a chronic illness
and half of them have more than one chronic illness. Chronic illness in the United States
accounts for 75 percent of the $2.4 trillion of healthcare expenditures.
To address the above challenge, the healthcare delivery system is experiencing reform
initiative by moving away from the fee-for-service payment model to a capitation payment
model based on a set dollar amount per enrolled subscriber either in total or per selected
conditions; bundled payments comprising a single payment to both physicians and hospitals
for specific procedures or conditions such as coronary artery bypass graft surgery and
rewards or bonuses for achieving predetermined quality outcomes such as reducing
preventable hospital readmissions. At the same time, the United States is experimenting with
new organizational forms potentially able to respond to the new payment incentives.
Lets discuss three such innovations

the Patient-Centered Medical Home (PCMH),

the Accountable Care Organization (ACO) and
the Population Health Management System (PHMS).

These three are selected because of their potential for providing more cost effective disease
prevention and management of patients with chronic illness. They are also selected because
of their potential to build on and reinforce each other as a coherent, sustainable package of
delivery system improvements.

PATIENT-CENTRED MEDICAL HOME

25

INNOVATION IN HEALTHCARE

One response to the current lack of coordinated care for patients with chronic illness is the
Patient-centred Medical Home. It provides patients with a primary care physician and a team
that can deliver personalized, whole person, coordinated care across conditions, episodes of
care, different providers and settings over time. It has been widely endorsed and supported by
numerous professional organizations in the US and worldwide.
The four key elements of the PCMH are:

its commitment to primary care;

its emphasis on the patient as the centre of all activities;
its implementation of new model practice; and
its association with increased payment incentives for providing more coordinated
care.

For a given population of patients, a PCMH provides continuous access to a primary care
provider (which can include a nurse practitioner or physician assistant) and a care team
guaranteeing first contact care. Patient-centred care recognizes the patient as the most
important member of the care team. As such, the PCMH empowers patients and their families
as active participants in the care process, partnering with them to understand and address
their needs and preferences. New Model practice involves the adoption of electronic health
records; implementation of the chronic care model including use of disease registries,
guidelines, and patient self-management support programs; and active participation in
continuous quality improvement initiatives. These tools enable the PCMH to track patient
referrals, treatments, and information across providers. To undertake the expanded
responsibility for actively coordinating care across the continuum of patient care, PCMHs
would be paid a care coordination fee in addition to being eligible for additional income from
participation in pay-for performance programs and sharing in savings from providing care for
less than established expenditure targets.

ACCOUNTABLE CARE ORGANIZATION

26

INNOVATION IN HEALTHCARE

Accountable Care Organizations are entities that accept responsibility for both the cost and
quality of care provided to a defined population of patients and provide the data on
performance. Along with the PCMH, ACOs are considered to be key elements of delivery
system reform, slowing the rate of increase in spending over time and providing more cost
effective care to the population. ACOs typically include physician practices and at least one
hospital, and could also include nursing homes, home health agencies, and other provider
organizations. They provide the umbrella organization for PCMHs, specialty practices,
hospitals, and other healthcare entities. They are particularly well suited for accepting
capitation, partial capitation, specific episodes-of-care based, and bundled payments. In these
payment mechanisms, the target levels of spending for the ACO would be established based
on several years of prior data, adjusted for risk and overall inflation. Those ACOs that
succeed in delivering care that meets or exceeds quality criteria for less than the expenditure
target would be eligible to share in the savings. This creates economic incentives for
hospitals, physicians, and other providers to work together to prevent unnecessary emergency
room visits, intensive care hospitalizations, and repeat hospitalizations. Key components of
ACOs are their local accountability for cost and quality, the ability to measure their
performance, and the ability to create shared savings.
The ACO is not a uniform one size fits all concept. There are at least five different models
of delivery that could serve as an ACO. These include the integrated or organized delivery
system, multi-specialty group practices, physician hospital organizations, independent
practice organizations, and virtual physician organisations.
Key to the success of the ACO model is the importance of measurement, the backbone for
accountability. This involves specifying the types and level of measures used, the focus of
measurement, and the focus of the provider. In the ACO model, the level of measurement
moves to the entire system or population of patients enrolled in or assigned to the ACO. By
placing measurement at the population level, the hope is that fragmentation will be reduced
and that care will be assessed at the population level across all patients over time. In regard to
the type of measurement, the current emphasis is on process measures of care such as
adherence to guidelines and recommended testing. In the ACO model, emphasis moves to
looking at outcomes measures of care such as reduced disability days, functional health status
scores and patient experience measures as well as overall efficiency of the care provided. The
hope is that this will provide better data for patients to make choices about providers and

27

INNOVATION IN HEALTHCARE

better data for providers to make changes in their practices including increased accountability
for resource use.
Given this measurement focus and the implementation of new payment incentives such as
capitation, partial capitation, and bundled payments, ACOs can potentially provide more cost
effective care utilizing a number of mechanisms. These include expanded use of nurse
practitioners and physician assistants; reducing waste by eliminating duplicate testing through
a focus on internal process of improvement; providing full implementation of chronic care
model disease management processes including patient self-support.
THE POPULATION HEALTH MANAGEMENT SYSTEM
To improve the health of populations and reduce the per capita cost of healthcare, all nations
will need to go beyond improvements in the performance of their healthcare delivery systems
to embrace the broader determinants of health. This will involve the development of crosssector organizations or networks that collectively take responsibility for population health.
As shown in Figure below, the PHMS draws together all of the community health-building
assets (the education sector, transportation sector, etc.) to enhance population health with the
goal of keeping as many people as possible chronically well. Payment is made to the
PHMS based on its achievement of predetermined population health measures.
The organizational form of the PHMS can vary depending on local circumstances. However,
the key is that it would be publicly accountable to local, state, and national governmental
bodies. The core responsibility of the PHMS entity is to:

assess the health status of the community and develop a resulting set of priorities for

addressing its needs;

work with the various cross-sector component organizations to develop strategies and

implement action plans to achieve the agreed upon goals; and

assure accountability for performance against the goals and aims.

28

INNOVATION IN HEALTHCARE

29

INNOVATION IN HEALTHCARE

INNOVATION IN MARKETING STRATEGIES

The mix of modern technology and medicine has led to substantial advances in the health
outcomes of people around the world. Notable advances include pacemakers, dental lasers,
automatic defibrillators (AEDs), cochlear implants, robotics in surgery, prosthetic hearts and
cardiac stents. These medical device innovations present a profoundly new opportunity for
both physicians and patients. Given the tremendous historic, and potential future, impact of
medical device innovation on healthcare, it is critically important to better understand the
characteristics of these innovations, particularly marketing strategies, that will undoubtedly
ensure their success in the marketplace.
Marketing in the healthcare industry began roughly 30 years ago when the American Hospital
Association sponsored the first conference on health-care marketing. The first healthcare
marketing book was published during that same timeframe. In the early 1990s, progressive
healthcare organizations began to evaluate their marketing objectives and began to try to
understand the market, their customers, and their motivations. These evaluations lead to an
expanded marketing role in healthcare organizations, which ultimately lead to marketing as a
core determinant in the direction of the company. Marketing is also not just limited to
promotional techniques, but extends into product conception, pricing structure, distribution
channels, customer service orientation, public relations and overall strategic planning.
Healthcare industries is not different from other industries, it faces challenges due to changes
in social behaviour, economic condition and increased competition. Under conditions of
turbulence, they have to be successful not only in competing under price and quality
pressures but they also are in a tremendous need of flexibility and innovation of the way they
do things. To stay ahead of their competitors even health care industries believe in strong
marketing need to keep innovating new marketing strategies all the time to grab the Top of
the mind awareness in the consumers mind.
Toward the end of the twentieth century, challenges in profitability, customer loyalty, quality
of care, and market dominance drove hospitals emulate other industries by incorporating
formal marketing functions. The new focus on customer wants, needs and expectations have
fuelled the rise of consumer-driven healthcare marketing. This fresh approach to marketing
recognizes the participants role in the delivery of care and the promotion of health education
and wellness. Consumer of today is radically different from yesterdays. Todays customers
have caller ids to block unwanted calls, a spam and a pop-up blocker on their internet. They

30

INNOVATION IN HEALTHCARE

even have Ti Vo which record their favourite programme without TV ads, that means todays
customer can block all the possible channels to reach them.
Todays healthcare landscape is a challenging arena. Organizations are in search of successful
and sustainable innovation strategies differentiate from the competition and create viable
solutions that offer improved healthcare experiences for patients and care providers in the
short to longer-term. At the same time the financial system needs to be sustainable. Many
challenges in healthcare demand a diverse mix of skills, knowledge and competences which
is beyond the capability of most individual businesses. Companies therefore have to think in
terms of new models of innovation that include partnerships, acquisitions or strategic
alliances equip themselves for the healthcare challenges ahead. As the presence &
competition of healthcare industry increases with each passing day it is a need of the hour to
adopt innovative strategies from non-healthcare industry to create a unique identity & an
edge over others keeping in mind consumer sensitivity & emotional response.
LEARNING FROM NON HEALTHCARE INDUSTRY
The healthcare industry is facing paradigm change. Within this context of paradigm change
lays opportunities for innovation. Applying non healthcare marketing strategies smartly in
hospital organization will help in enhancing the brand image. The belief that a monumental
problem can be solved by introducing a single tactical element- a brochure, a billboard, a
radio campaign is like the same traditional approach where patients asks for a prescription
without being seen by the doctor and that can be made and successfully implemented. What
needs to be done is to go beyond the currents practices and explores the marketing
opportunity in non-healthcare field.
USE OF MEDICAL VENDING MACHINE IN HEALTHCARE SECTOR
There are much availability of consumables vending machines in several metro stations and
public places. Medical vending machines can be introduced in different metro stations,
railway stations, airports and satellite clinics. The vending machine can be equipped with
mini first aid kits consist of small antiseptic liquid bottle, cotton bowls, bandages, pain relief
tablets, ORS packets, baby care products and more. Medication-dispensing kiosks could be
the next step in the hybrid of health care and self-service. U S Food and Drug Administration
(FDA) recently held public hearings on whether consumer should be able to use patient
kiosks or other technology to conduct self-screenings and obtain certain medications that
currently require prescriptions. FDA is still in early stages of considering such a change.

31

INNOVATION IN HEALTHCARE

Patients already use kiosks to test their blood pressure, check-in for a doctors appointment,
and learn about health problems. Now, prescription medicine dispensing systems are the
next step in user-friendly health care. Medical Vending machine is to go on trial in the UK
which will offer medicines at any time of the day or night. Their arrival in Britain has been
supported by the UK Government and Department of Health. The trial using the machines in
UK hospitals will be assessed by a British university. Its sophisticated technology means it
can dispense drugs whether or not they need to be counted, packed or refrigerated. It is bolted
to a concrete plinth and surrounded by plate steel to protect it against thieves. The machines
are already on trial in Canada, where the government is taking drastic steps to cut down the
cost of prescribing medicines. However, in contrast to many kiosk manufacturers that are
trying to enter this emerging industry, one of the supplier designed such vending machine
system which does not allow patients to self-diagnose, nor does it take the pharmacist out of
the process, which is two of the biggest hurdles now facing the FDAs implementation of
similar technology. The customer can pick up their medicine at their convenience through the
self-service system by swiping their authorization card and placing their index finger on a
scanner. Once the patients identity has been verified, a lockbox door opens and they can
access their medicine.
MARKETING ON SOCIAL MEDIA
Facebook and Twitter, the largest social media Web sites, have more than 350 million users
worldwide, and surveys indicate that 60% of Americans turn first to the Internet when
seeking health-related information. It is therefore surprising that the pharmaceutical and
medical-device industries have been slow to establish a social media presence. The drug
industry allocated less than 4% of the more than $4 billion it spent on direct-to-consumer
advertising to Internet outlets in 2008, and only a tiny fraction of that was for social
networking sites.
Social media brings a new dimension to health care as it offers a medium to be used by the
public, patients, and health professionals to communicate about health issues with the
possibility of potentially improving health outcomes. Social media is a powerful tool, which
offers collaboration between users and is a social interaction mechanism for a range of
individuals. Although there are several benefits to the use of social media for health
communication, the information exchanged needs to be monitored for quality and reliability,
and the users confidentiality and privacy need to be maintained.

32

INNOVATION IN HEALTHCARE

33

INNOVATION IN HEALTHCARE

CHALLENGES IN INNOVATION IN HEALTHCARE INDUSTRY

Health care in most other developed countries is ailing and in need of help. Yes, medical
treatment has made astonishing advances over the years. But the packaging and delivery of
that treatment are often inefficient, ineffective, and consumer unfriendly.
The well-known problems range from medical errors, which by some accounts are the eighth
leading cause of death in the United States, to the soaring cost of health care. The amount
spent now represents about one-sixth of the U.S. gross domestic product; it continues to grow
much faster than the economy; and it threatens the economic future of the governments,
businesses, and individuals called upon to foot the bill. Despite the outlay, more than 40
million people have no health insurance.
Such problems beg for innovative solutions involving every aspect of health careits
delivery to consumers, its technology, and its business models. So why is innovation so
challenging in health care? Its because of these six forces which either help or hinder efforts
at innovation, Individually or in combination.
PLAYERS
The health care sector has many stakeholders, each with an agenda. Often, these players have
substantial resources and the power to influence public policy and opinion by attacking or
helping the innovator. For example, hospitals and doctors sometimes blame technologydriven product innovators for the health care systems high costs. Medical specialists wage
turf warfare for control of patient services, and insurers battle medical service and technology
providers over which treatments and payments are acceptable. Inpatient hospitals and
outpatient care providers vie for patients, while chains and independent organizations spar
over market influence. Non-profit, for-profit, and publicly funded institutions quarrel over
their respective roles and rights. Patient advocates seek influence with policy makers and
politicians, who may have a different agenda altogether namely, seeking fame and public
adulation through their decisions or votes.
FUNDING
Innovation in health care presents two kinds of financial challenges: funding the innovations
development and figuring out who will pay how much for the product or service it yields.
One problem is the long investment time needed for new drugs or therapies that require FDA
approval. While venture capitalists backing an IT start-up may be able to get their money out

34

INNOVATION IN HEALTHCARE

in two to three years, investors in a biotech firm have to wait ten years even to find out
whether a product will be approved for use. Another problem is that many traditional sources
of capital arent familiar with the health care industry, so its difficult to find investors, let
alone investors who can provide helpful guidance to the innovator.
POLICY
Government regulation of health care can sometimes aid innovation (orphan drug laws
provide incentives to companies that develop treatments for rare diseases) and sometimes
hinder it (recent legislation in the United States placed a moratorium on the opening of new
specialty hospitals that focus on certain surgical procedures). Thus, it is important for
innovators to understand the extensive network of regulations that may affect a particular
innovation and how and by whom those rules are enacted, modified, and applied.
TECHNOLOGY
As medical technology evolves, understanding how and when to adopt or invest in it is
critically important. Move too early, and the infrastructure needed to support the innovation
may not yet be in place; wait too long, and the time to gain competitive advantage may have
passed.
CUSTOMERS
consumers spend tremendous sums out of their own pockets on health care servicesfor
example, an estimated $40 billion on complementary medicine such as acupuncture and
meditationthat many traditional medical providers believe to be of dubious value. Armed
with information gleaned from the Internet, such consumers disregard medical advice they
dont agree with, choosing, for example, to shun certain drugs doctors have prescribed. A
company that recognizes and leverages consumers growing sense of empowerment, and
actual power, can greatly enhance the adoption of an innovation.
ACCOUNTABILITY
Increasingly, empowered consumers and cost-pressured payers are demanding accountability
from health care innovators. For instance, they require that technology innovators show costeffectiveness and long-term safety, in addition to fulfilling the shorter-term efficacy and
safety requirements of regulatory agencies.

35

INNOVATION IN HEALTHCARE

RECOMMENDATION FOR INNOVATIVE AND SUSTAINABLE

HEALTHCARE
While various innovations are being carried out across the healthcare continuum it is critical
to step back and analyse if the current trend of fragmented investments, technological
developments and institutions can effectively address the huge and growing unmet demand
for healthcare services.
Global experience shows that often sustainability of innovations is the driving force that
balances growth and technical advances to the needs of the population and fosters better
targeted and integrated innovations. To ensure sustainability, innovations would need to be:

Holistic spanning across the value chain

Cost-effective minimal costs for desired outcomes
Affordable optimal prices based on target market
Recognized awareness on relevance and usage

While stakeholders need to constantly focus on these aspects to drive long-term frugal
innovations, concerted efforts are also required to strengthen factors that significantly
contribute to building an environment of sustainabilityIMPROVEMENTS IN TECHNOLOGY
Technology in the last two decades has revolutionized the way healthcare is delivered. The
use of customized technology has the potential to impact patients and providers alike by
enhancing the quality of delivery, reduction in turnaround time of workflows and thus the
overall cost, besides bringing in higher accountability into the system. Illustrations of
customized technological advancements that have already been implemented include
telemedicine, tele-monitoring, HMIS, m-health, smart cards, mobile clinical devices and the
use of palmtops.
IMPROVEMENT IN QUALITY OF HUMAN RESOURCES
To support technological developments, policy makers and industry leaders would also need
to focus on availability and quality of human resources with suitable skill sets and appropriate
deployment at different levels of the health care set-up: private and public, urban and rural,
and prevention and cure.

36

INNOVATION IN HEALTHCARE

IMPROVEMENT IN RESEARCH CAPABILITIES

Industry leaders and corporates also need to substantially invest into building adequate
research capacity to investigate and report key issues that affect the health system and policy
for further improvements.
Enhanced research capacities, complemented by quality human resources and relevant
technology, will help create a more holistic and progressive approach to create a health
system in which innovations are undertaken on a sustained basis.

37

INNOVATION IN HEALTHCARE

CONCLUSION

Change is the only constant in today's world and every industry has to innovate and invest in
new technologies and ideas in order to grow and sustain in the ever changing markets.
Healthcare is no exception to this. However, successful innovations cannot be managed like
ordinary business functions with traditional management controls. They should be fostered
and nurtured in an environment which is radically different from the existing business
settings.
People-Process-Technology are the driving forces for Innovation in the Healthcare Industry.
Proper balance between these forces ensures sustainability and overall success of the
innovation briefly carried on. Besides on through check Technology and People play a major
role in Innovation. Technology aids and the processing and utilization of human resource can
make any Innovation into a major success.
Cost, Pricing, Funding, Cross-country barriers can be easily overcome with proper blend of
technology implementation and proper Delivery system. Also efficient marketing strategies
will ensure overall achievements of the targets and successful innovation implementation.

38

INNOVATION IN HEALTHCARE

REFERENCES

Books and Magazines:

Thriving under disruption: How to succeed in the years ahead, Mckinsey

Top health industry issues of 2016, PwC
Exploring Technological Innovation in Health Systems, Conference Board of Canada,

August 2007
Innovative and sustainable healthcare management: Strategies for growth, Deloitte

Website:

http://pwc.com
http://deloitte.com
http://en.wikipedia.org

39