This was a Keynote Address I gave at Healthcare Unbound 2013 and focused on what’s needed for healthcare technology innovation in a value- and outcomes-driven model. There’s a ton of hype surrounding disruptive technology innovation in healthcare but nothing is truly making a dent in the healthcare sector the same way as disruptions have occurred in other major segments of our economy. The slow but sure march from Fee For Service Based Care to Outcomes Driven Care has certainly started but it’s neither fast enough nor substantial enough to bend the cost curve or improve value to patients in the short term. This presentation discusses how we can get beyond the hype by focusing on actionable innovation. Specifically, I answered the following questions: * What does innovation in healthcare mean? * Where are the major areas in healthcare where innovation is required? Important takeaways this session included: * Understand PBU: Payer vs. Benefiter vs. User * Understand why healthcare businesses buy stuff so you can build the right thing

1. Getting Beyond the Hype of
“Disrupting Healthcare” and
Focusing on Actionable Innovation
10th Annual Healthcare Unbound
Conference & Exhibition
Shahid N. Shah, CEO

2. NETSPECTIVE
Who is Shahid?
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Serial healthcare IT entrepreneur, advisor to
numerous startups, blogger, healthcare futurist
20+ years of software engineering and multi-site
healthcare system deployment experience in
Fortune 50 and Government sectors.
12+ years of healthcare IT and medical devices
experience (blog at http://healthcareguy.com)
15+ years of technology management experience
(government, non-profit, commercial)
10+ years as architect, engineer, and
implementation manager on various EMR and EHR
initiatives (commercial and non-profit)
Author of Chapter 13, “You’re
the CIO of your Own Office”
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What’s this talk about?
Questions answered
Key takeaways
• Is disruptive innovation in
healthcare possible?
• What does innovation in
healthcare mean?
• Where are the major areas
in healthcare where
innovation is required?
• Go narrow, specialize, dive
deep
• Understand PBU: Payer vs.
Benefiter vs. User
• Understand why healthcare
businesses buy stuff so you
can build the right thing
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What does “disrupting healthcare” mean?
This is $1 Trillion and the
Healthcare Market is about
$3 Trillion
This is $1 Billion
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5. No, your innovation will not
disrupt healthcare.
I promise.
The good news
is that doesn’t
have to.
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6. No, your big data or mobile ideas
will not disrupt healthcare.
But if you can use them to add or extract value
from the existing system, you’ll do just fine.
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7. No, your EHR/PHR or app will not
be used by enough doctors or
patients to disrupt healthcare.
But if you can get even a fraction of them
to use your software, you’ll do just fine.
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8. No, your innovation will not be
accepted by permissions-oriented
institutions.
Find customers with a problem-solving culture
willing to accept risks and reward failures.
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9. No, your innovation will not be
easily integrated into regulated
device-focused clinical workflows.
Incumbent vendors will not entertain the potential of
new legal liabilities without someone to share it with or
new competition without direct compensation.
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What I mean by “actionable innovation”
You have made the job of
identifying, diagnosing,
treating, or curing
diseases faster, better, or
cheaper for clinicians
through the use of
information technology
(IT) or business models.
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You have made the job of
self-diagnosing, selftreating, or preventing
diseases and improving
overall wellness of
patients through the use
of new incentives,
business models, or IT.
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Life expectancy is increasing…
…but the rate of growth is slowing
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Bacteria used to kill us the most…
Per 100k population, Historical Statistics of the United States, Millennial Edition
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We’ve got most infections beat…
…except the flu and pneumonia
Per 100k population, Historical Statistics of the United States, Millennial Edition
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Infectious diseases used to kill us…
…but what’s left seem only to be “manageable” not easily “curable”
Top killers in 1900
Pneumonia
and influenza
TB
Diarrhea and
enteritis
Top killers today
Heart disease
Cancer
Chronic lower
respiratory
diseases
Per 100k population, Historical Statistics of the United States, Millennial Edition
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From cures to management…
…young people don’t dye of diseases often now
Death by age group, 1900
Death by age group, Today
http://siteresources.worldbank.org/INTHSD/Resources/topics/Health-Financing/HFRChap1.pdf
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What Is the Business of Health Care?
What business are you in? The Emergence of Health as the Business of Health Care
• It's always better to define a business by what
consumers want than by what you can produce or
build
– For example, whereas doctors and hospitals focus on
producing health care, what people really want is health
• In the future, successful doctors, hospitals, and health
systems will shift their activities from delivering health
services within their walls toward a broader range of
approaches that deliver health.
Source: http://www.nejm.org/doi/full/10.1056/NEJMp1206862
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PBU: Payer vs. Benefiter vs. User
If you don’t understand the exact interplay between PBU your product will fail
The person or group that
actually uses the product.
User
The person or group
that benefits most
from the use of the
product.
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Benefiter
Payer
The payer is the
person/entity
that writes the
check for your
product.
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What kinds of users are you targeting?
Go narrow and deep not wide and shallow
Prevention
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Education
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Health Promotions
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Healthy Lifestyle Choices
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Health Risk Assessment
26% of Population
4% of Costs
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Obesity Management
Wellness Management
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Assessment – HRA
Stratification
Dietary
Physical Activity
Physician Coordination
Social Network
Behavior Modification
35% of Population
22% of Costs
Management
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Diabetes
COPD
CHF
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Stratification & Enrollment
Disease Management
Care Coordination
MD Pay-for-Performance
Patient Coaching
35% of Population
37% of Costs
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Physicians Office
Hospital
Other sites
Pharmacology
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Catastrophic Case
Management
Utilization Management
Care Coordination
Co-morbidities
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4% of Population
36% of Costs
Source: Amir Jafri, PrescribeWell
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Defining your PBU participants is really hard
Don’t focus on market segmentation, but do try to figure out who your customer is
Target health
sector?
Number of
employees?
Annual sales
volume?
Geography?
Number of
hospital beds?
Number of
patients?
Type of
patients?
The list goes on
and on…be
specific!
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How will your customer pay for your innovation?
If you haven’t figured it out for them, customers will not figure it out for themselves
Direct Payment
• Your best option
• Very few truly disruptive
technologies can be
directly paid for by
providers within the USA
• Limited adoption of
‘traditional’ pay for service
reimbursement for next
generation technology
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Direct Reimbursement
Indirect Reimbursement
• Second best option
• Improvements in
technology are outpacing
payer adoption
• Reimbursement will come
but its time consuming and
difficult
• Emerging option
• Payer requirements for
improved quality and
efficiency are creating
indirect incentives to adopt
innovative solutions
• Solutions targeting new
value-based
reimbursement incentives
are highly useful to medical
providers
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Where does your innovation fit?
Target the right market so you understand the regulatory impacts
Be aware of regulations, don’t fear them, use them as
a competitive advantage
Patient
Education
Least Regulation
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Patient
Administration
Diagnostic
Tools
Therapeutic
Tools
Therapies
Most Regulation
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What problem will you be solving?
Focus on jobs that need to be done, not what you want to build
Improve
medical
science?
Improve access
to care?
Reduce costs?
Improve
therapies?
Improve
diagnostics?
Improve drug
design?
Improve drug
delivery?
Create better
payment
models?
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How to identify the best opportunities
From “Jobs to be Done” to the “Five Cs of Opportunity Identification”
Circumstance
• The specific
problems a
customer
cares about
• The way they
assess
solutions
Context
• Find a way to
be with the
customer
when they
encounter a
problem and
• Watch how
they try to
solve it
Compensating
behaviors
Constraints
• Develop an
innovative
means around
a barrier
constraining
consumption
• Determining
whether a job
is important
enough to
consider
targeting
• One clear sign
is a customer
spending
money trying
to solve a
problem
Criteria
• Customers
look at jobs
through
functional,
emotional,
and social
lenses
Source: http://blogs.hbr.org/anthony/2012/10/the_five_cs_of_opportunity_identi.html
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Do you have ideas in payment design?
Payment models going fee for service to outcomes-driven care
The business needs
The technology strategy
• Quality and performance
metrics
• Patient stratification
• Care coordination
• Population management
• Surveys and other directfrom-patient data collection
• Evidence-based surveillance
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Aggregated patient registries
Data warehouse / repository
Rules engines
Expert systems
Reporting tools
Dashboarding engines
Remote monitoring
Social engagement portal for
patient/family
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Can you repurpose or enhance health data?
Try to use existing data to create new diagnostics or therapeutic solutions
Economics
Administrative
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Phenotypics
Behavioral
Biochemical
Genomics
Proteomics
IOT sensors
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Some stuff not to focus on
Incremental innovation is easier, disruptive innovation is probably more useful
• Don’t go for simple incremental innovation if
you can be bold and “disruptive” but make it
look like you fit into the existing ecosystem
nicely
• Don’t look at mHealth, look at mobility in
healthcare
• Don’t look at apps, look at entire systems
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27. NETSPECTIVE
Forget mobile apps, focus on health IOT
• With all the attention being paid to mHealth
there’s been an useless focus on mobile apps
• For the mobile apps, instead focus on
mobility in healthcare through “health
internet of things (IOT)” and self-care
technologies
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Healthcare Industry Fallacies
• Healthcare folks are neither technically challenged nor
simple techno-phobes (they’re busy saving lives)
• Most product decisions are no longer made by clinical
folks alone, CIOs are fully involved
• Complex, full-featured, products are not easier to sell
than simple, stand alone tools that have the capability
of interoperating with other solutions are
• Hospitals will not buy unless one proves value.
• Selling into doctors offices is not easy.
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What makes your products successful
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Easy to explain
Defendable and differentiated
Attractive partnership opportunities
Word of mouth opportunity
Potential for PR
Scaleable staff and systems
Scaleable product — build once, sell many times
Uncomplicated
Focused
Sales model is scaleable and predictable
Own relationship with and information about customers
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30. NETSPECTIVE
Why healthcare businesses buy stuff
Healthcare businesses have complex buying processes – figure out why and what they buy
Increase
revenue
(topline)
Maintain
capabilities
Reduce costs
(bottomline)
Attract new
patients
Increase staff
productivity
Find your
reason
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31. NETSPECTIVE
The Customer Relationship
If you can’t figure out why they buy, see if any of the things below make sense
Customer Gives
You Get
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Money
Time
Energy
Commitment
Referrals
Past experience
Expectations
Knowledge
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You Give
Customer Gets
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Product
Price
Value
Convenience
Selection
Service
Warranty
Brand
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32. NETSPECTIVE
Health technology sector has many ups and downs
Make sure you understand where your product fits in the hypecycle
Source: Gartner; “Hype
Cycle for Healthcare
Provider Applications and
Systems, 2010”
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33. Visit
http://www.netspective.com
http://www.healthcareguy.com
E-mail shahid.shah@netspective.com
Follow @ShahidNShah
Call 202-713-5409
Thank You