Healthcare’s Convoluted Business Model That Stifles Innovation Adoption

In our cellphone example above, these five “people” are all one and the same person (just like in our AI-generated image the two identical twins of Desiree and Bella seem to be one and the same person).

But not in healthcare.

In healthcare, the people who WANT the solution, are often not the ones who can DECIDE to buy them. The people who DECIDE may sometimes be the ones who PAY for it. And the people who USE the solution may not be the ones who BENEFIT from it, though they may be the ones who WANTED it.

Let’s take RPM (Remote Physiological Monitoring) as an example. The person who WANTs the solution (e.g., for chronic care management, CCM) may be the population health director. The ultimate DECISION to move forward lies with the leadership team, especially the CFO, the CTO/CIO, and maybe even the CMO. The PAYMENT for the acquisition and subscription may come out of the IT budget and is then offset by reimbursement through the health insurance. The USERs in this case are a monitoring nurse. the primary care providers, and the patients.

The BENEFICIARIES are the patient (better health), the population health manager (better chronic care management), and the primary care provider (indirectly, by having healthier patients). But ultimately, the biggest beneficiary is the patient’s healthcare insurance, when the enrollment in the CCM program leads to higher patient engagement and less frequent or no visits to the Emergency Room. Yet the healthcare insurance only paid for the solution in part and indirectly, whereas the organization had to make the investment in establishing an RPM program.

Why the adoption of innovative solutions is stifled

So what are the downsides, the side effects of such a convoluted business model?

If W = D = P = U = B creates the ideal environment — what kind of environment does W ≠ D ≠ P ≠ U ≠ B create?

The primary effects are a misalignment of incentives and rewards. Which in turn leads to impediments to adopting innovation. Here are just a few examples from the 10 different possible comparisons of the five elements:

1. The User does not Benefit (U ≠ B). The biggest misalignment and impediment to innovation occurs when the USER of the solution does not directly BENEFIT from it. This leads to lack of desire and outright resistance by the “user”. When there is no “what’s in it for me” (“wiifm”), there is no incentive for the user to go the extra mile to learn and use the solution.

2. The Payor does not Benefit (P ≠ B). This disconnect oftentimes makes the innovation adoption unsustainable in the long run or it may even get it killed right on the CFO’s desk when the financial numbers don’t match up. In our example above, the health system never sees the $3,000 saved due to an emergency room visit that never happened, whereas the health insurance only reimbursed a few hundred dollars for half a year of RPM.

3. The person who has to PAY for it is not the person who WANTS it (P ≠ W). Without alignment here, the person who wanted the solution, may want more and more, because they don’t feel the consequence of paying for it. Conversely, the person who pays for it cannot justify the expense for lack of wanting (especially if they don’t see the benefits).

4. The User is not involved in the Decision (U ≠ D) and/or does not want it (U ≠ W). Oftentimes in healthcare decisions are made by senior leadership or by committees without much input from the actual users (e.g., nurses, clinicians in non-leadership positions). Frequently the users, not having been involved, also don’t have the desire, the want for the solution.

The Road out of the Quagmire

Since “every system is perfectly designed to get the results it gets”, this convoluted business model creates a messy, misaligned environment that is inefficient, ineffective, and not sustainable.

Once you study the various stakeholders involved in the selection, purchase, and use of an innovative solution, you have multiple quite simple options to better align the incentives and create the system that gets you the results you want.

We will cover those solutions in next week’s Telehealth Tuesday.

Your mission, should you choose to accept: Take a look at an innovative solution at your organization that is falling short of expected results. recently implemented: Who wanted the solution and who ultimately made the decision and paid for it? Who are the people using the solution and who are the various beneficiaries? If you can answer those questions, you are already halfway on your way to ensuring a long-term sustainability or even growth of adoption.