If asked, most of your employees would probably describe your organization as highly innovative. Would those same people be able to describe the most impactful innovation in the last two years? Would they be able to describe a single innovation? Do they know who is in charge of innovation? If the answer to those three questions is not a universal and resounding ‘yes,’ then perhaps the term innovation does not really apply to your organization.
When I look at healthcare from one perspective, the perspective of the services it delivers, I see an industry that is the poster child for innovation. Our system of healthcare delivers services that others have yet to think of. As an example, a few months ago I watched a video of a skin cell being transformed into a beating heart muscle cell. If you Google “healthcare innovations,” all of the hits have to do with the healthcare services we are able to deliver.
However, when I look at the industry from the perspective of how providers and payers operate their businesses, the term innovation does not jump out at me. If the healthcare services delivered are reflective of a 2.0 business model, how then can the way the businesses operate continue to function under a 0.2 business model? Because of this is, it reasonable to assume that the industry actually operates in a 1.1 model (2.0 + 0.2)/2 = 1.1?
Does the 0.2 portion of healthcare water down or dilute the value of the 2.0 services it delivers?
I think it does, or at least it makes the acquisition of those services by patients (customers) much more tedious for those doing the acquiring.
The purpose of innovation is to bring something new to the market that is so compelling that it will make customers in any industry leave one provider for the other. It is so compelling that it will make those leaving choose to stay with their new provider. It will compel those who changed providers to advocate to others that they join them.
We have just described an innovation strategy that brings about:
- Patient Acquisition
- Patient Retention
- Patient Referrals
And since nobody seems to know what it costs to acquire a patient, innovation should be a strategic focus. Given a lifetime value of a patient of between $180,000 and $250,000, one should argue that innovating to acquire patients, retain them, and earn their referrals offers a substantial ROI for a very reasonable investment.
Can it also be argued that innovation can be applied to reducing readmissions by 20 percent or more, and to dramatically enhancing the revenue cycle?
It can indeed.
People need two things from their provider; they need to get well and stay well, and they need to be able to interact well with the institution. The notion is so simple it is silly — if people cannot easily do something as basic as scheduling an appointment, they will not buy services. Or they will not buy them more than once. And they will not refer others.
So, just what is this innovation that can do all of these wonderful things? Sometimes it is easier to first make the point of what it isn’t. Adding valet parking, free Wi-Fi in the lobby, or a Starbucks coffee cart are not examples of innovation. Neither is implementing a new ERP system or enhancing the organization’s website.
Innovation is not only about doing things that other organizations are not doing, but discovering and doing those things that offer compelling reasons for your customers and theirs to switch their business to you, to stay with you, and to compel others to join you.
Some examples of firms that have innovated how people do business with them include:
- Netflix: eliminated what their customers did not see as convenient or valuable processes; two trips to get and return the video, eliminated late fees, and offered unlimited rentals for a single fee
- CVS: eliminated calling the PCP, scheduling the visit, and having to drive to the pharmacy for medications. CVS just added the ability for people to refill their prescriptions by taking a photo of their prescription bottle
- Banking: instead of having to deposit a check at a bank or ATM, people can deposit the check electronically by photographing the check.
And here is the part that most of their customers overlook. The innovation wasn’t just a win for the customers; it has been a huge win for the institutions who innovated.
So, how does knowing what Netflix and CVS did help my organization understand what we should do to innovate?
Begin by looking at what your organization would have to look like from the perspective of your customers to create a remarkable user experience each time someone interacts with it — in-person, on the phone, and online. Start by asking your organization’s stakeholders; customers and patients. Then define the wow-factor, define remarkable — not better, not new and improved. And then design that remarkable experience at each touchpoint. You will know it when you see it because people will tell you when they see it.