Navigating a Recession - Five Tips to Keep Your Innovation Roadmap on Track
During a recession, healthcare organizations can maintain innovation efforts by prioritizing high-value initiatives, leveraging existing capabilities and partnerships, and focusing on incremental innovation. Optimizing innovation processes and governance is also crucial, as is fostering an agile mindset that values adaptability, collaboration, and continuous improvement. By doing so, healthcare organizations can emerge stronger and more resilient than ever before and continue to drive value and improve patient outcomes.
Hospitals are facing an unprecedented strain post-COVID, leading to a need for increased efficiency and innovation to maintain the quality of care for patients. McKinsey & Company says that healthcare organizations that prioritize innovation during a recession are more likely to achieve long-term success. This requires a strategic approach that focuses on initiatives with the biggest impact on patient outcomes, potential cost savings, and differentiation from rivals. The Lancet Digital Health study reveals that innovation in the healthcare industry can lead to cost savings while improving patient outcomes and overall quality of care (2018). Healthcare businesses can leverage existing resources and relationships. Collaboration with partners reduces the need for costly internal development initiatives by giving access to knowledge, resources, and technology that healthcare organizations may not already have.
According to Boston Consulting Group, strategic partnerships can increase the success rate of innovation initiatives. Prioritizing incremental innovation can assist firms in achieving their innovative objectives while controlling costs and risks, enabling continual development. Incremental innovation involves making small, iterative changes to existing goods, services, and procedures.
In this article, let us examine these critical priority items and various others that are of utmost importance for senior management in hospitals to prioritize.
Tip 1: Prioritize Innovation Initiatives Based on Business Value
Governments worldwide spent US $9 trillion (11% of global GDP) 1 on health in 2020 to respond to the COVID-19 pandemic. This offset the drop in out-of-pocket spending and helped health systems cope with the crisis. It was part of a fiscal policy that eased the health and economic impacts of the pandemic. Innovation has emerged as a crucial factor for healthcare organizations to maintain their market position and deliver exceptional care delivery services, products, or technologies. Nevertheless, the efficacy of innovation initiatives varies, and organizations need to prioritize them based on their potential business value.
Importance of Prioritizing Innovation Initiatives
Innovation initiatives are crucial for healthcare organizations to improve patient care, streamline operations, and achieve competitive advantage. Organizations must prioritize their innovation efforts to ensure that they align with their business objectives and generate the most value. Setting strategic priorities is a critical step in achieving your organization’s goals. However, the traditional approach of rank ordering can lead to demoralization and division among team members. As per Harvard Business Review 2 to ensure success, it is essential to consider three key factors: objectives, resources, and timing. These factors help determine which priorities are critical, important, or desirable. By focusing on the essentials and providing adequate resources to the critical ones, while remaining adaptable with the important and desirable ones, you can achieve your goals more efficiently and effectively.
Prioritizing innovation initiatives can help organizations identify which initiatives align with their long-term strategy and which are most likely to generate a return on investment. According to a report by the World Health Organization (WHO), prioritizing health innovations based on their potential impact and cost-effectiveness can improve health outcomes and reduce healthcare costs. For example, a study published in Medicine (Baltimore) 3 found that hospitals that implemented electronic health records (EHRs) experienced a significant reduction in patient mortality rates and length of stay. EHR implementation also resulted in cost savings of up to $1.5 million per year.
Assessing the Potential Value of Innovation Initiatives
To assess the potential value of innovation initiatives, healthcare organizations can use various tools and frameworks. One such tool is the Business Model Canvas, which provides a visual representation of a company’s value proposition, customer segments, revenue streams, and cost structure. Another tool is the Value Proposition Canvas, which helps organizations assess the fit between their products and services and their customers’ needs. Healthcare organizations can also conduct market research and engage with customers to understand their pain points, needs, and preferences.
Healthcare organizations can collaborate with external stakeholders, such as patients, clinicians, and industry experts, to identify areas of opportunity for innovation. For example, a study published in the Frontiers in Medical Technology 4found that engaging patients in the development of digital health solutions can improve patient satisfaction and adoption rates. By involving external stakeholders in the innovation process, healthcare organizations can ensure that their innovation efforts align with the needs of their customers and other key stakeholders.
Prioritizing Innovation Initiatives for Better Resource Allocation
Innovation initiatives require significant investments of time, money, and talent. By focusing on initiatives with the most potential business value, healthcare organizations can make more strategic decisions about how they allocate their resources. This can help organizations avoid wasting resources on initiatives that are unlikely to generate a return on investment and ensure that they have the necessary resources to pursue initiatives that can drive growth and innovation.
The healthcare sector has leveraged the pandemic crisis to create innovative solutions for patients, providers, and payers. McKinsey’s study5 highlights the importance of fostering a culture of innovation to achieve innovation goals. Healthcare organizations must prioritize innovation and invest in the right resources to remain at the forefront of healthcare innovation.
Tip 2: Leverage Existing Capabilities and Partnerships
In the healthcare industry, innovation is critical for improving patient outcomes and reducing costs. However, in the midst of a recession or economic downturn, healthcare organizations face the challenge of balancing financial sustainability with the need for innovation. One strategy for achieving this balance is to leverage existing capabilities and partnerships to accelerate innovation initiatives.
Identifying and Leveraging Existing Capabilities
Healthcare organizations possess a wealth of knowledge, experience, and resources that can be leveraged for innovation. By identifying their existing capabilities, organizations can build on what they already have and avoid the costs and risks associated with starting from scratch. These capabilities can be harnessed for a variety of innovation initiatives, such as developing new care models, implementing digital health solutions, and improving clinical workflows.
Case Study: Mayo Clinic and IBM Watson Health
One successful example of leveraging existing capabilities for innovation is the collaboration between Mayo Clinic and IBM Watson Health 6. Together, they developed the Watson for Clinical Trial Matching platform, which uses artificial intelligence to match cancer patients with clinical trials based on their medical history and genetic profile.
The platform has improved the efficiency and effectiveness of clinical trial recruitment, which is a major challenge in the healthcare industry. According to the American Society of Clinical Oncology 6, only 3-5% of adult cancer patients participate in clinical trials, largely due to the difficulty of finding eligible patients and the complexity of the enrollment process.
With the Watson platform, Mayo Clinic was able to increase its clinical trial enrollment by 80% 7, compared to traditional methods. This is a significant achievement that has the potential to accelerate the development of new cancer treatments and improve patient outcomes.
Building Successful Partnerships
Partnerships are another key component of leveraging existing capabilities for innovation. By collaborating with external entities such as technology firms, research institutions, and other healthcare organizations, healthcare organizations can access new ideas, resources, and expertise. Building successful partnerships requires careful planning and execution. Healthcare organizations must identify partners that complement their strengths and can help fill in their gaps. They must also establish clear goals and expectations, as well as effective communication channels.
Case Study: Veterans Health Administration and Department of Defense
One successful partnership in the healthcare industry is the collaboration between the Veterans Health Administration (VA) and the Department of Defense (DOD) to develop a joint electronic health record (EHR) system. This partnership leverages the expertise and resources of both organizations to create a seamless and comprehensive health record system for veterans and active-duty service members.
The joint EHR system, known as MHS GENESIS 8, has been implemented at four military medical facilities and will eventually be deployed at all military medical facilities and VA hospitals. The system has the potential to improve the quality and continuity of care for veterans and active-duty service members, as well as reduce costs by eliminating duplication and inefficiencies.
Benefits of Leveraging Existing Capabilities and Partnerships
Leveraging existing capabilities and partnerships can provide several benefits for healthcare organizations seeking to accelerate innovation initiatives:
- Reduced costs and risks associated with developing new capabilities from scratch
- Access to new ideas, resources, and expertise from external partners
- Improved speed and effectiveness of innovation by leveraging the strengths of multiple organizations
According to McKinsey & Company 9 companies that leveraged existing capabilities and partnerships outperformed those that did not during times of economic uncertainty. In healthcare, this strategy is becoming increasingly important as organizations face challenges such as rising costs, changing regulations, and technological disruptions.
Source: Overcoming the cost of healthcare transformation through partnerships – McKinsey and Company 9
Leveraging existing capabilities means taking advantage of the skills, knowledge, and resources that a healthcare organization already possesses. This can include existing technology infrastructure, expertise in a particular area of healthcare, or established relationships with other organizations. By leveraging these assets, healthcare organizations can accelerate innovation initiatives and achieve their goals more efficiently.
Tip 3: Focus on Incremental Innovation
Introduction Innovation has become an essential driver of growth and competitive advantage for healthcare organizations. It enables healthcare organizations to stay ahead of the competition, improve patient outcomes and drive growth. However, during a recession, healthcare organizations may face budget constraints, making it challenging to continue investing in innovative solutions. In such situations, incremental innovation becomes a valuable strategy for healthcare organizations.
What is Incremental Innovation?
Incremental innovation is a type of innovation that involves making small, continuous improvements to existing products, processes, and services. Unlike radical innovation, incremental innovation is less risky and more cost-effective. By focusing on incremental innovation, healthcare organizations can continue to make progress towards their innovation goals while managing costs and risks.
Benefits of Incremental Innovation During a Recession
There are several benefits of focusing on incremental innovation during a recession:
One of the significant benefits of incremental innovation during a recession is that it allows healthcare organizations to maintain their competitive advantage. By making small improvements to their existing products, processes, and services, healthcare organizations can stay relevant and continue to meet their customers’ evolving needs.
The 2022 State of Healthcare Report 10 by HIMSS and its Trust partners shows that more than 50% of respondents have used digital healthcare tools like smart watches and fitness trackers in the past year. This indicates that incremental innovation is improving patient engagement and enabling more personalized care delivery. Digital healthcare tools empower patients to take control of their health, resulting in better outcomes and more efficient healthcare resource use. The future of healthcare is personalized, data-driven, and digital.
Another benefit of incremental innovation is that it allows healthcare organizations to manage costs more effectively. By making small improvements to existing products, processes, and services, healthcare organizations can avoid the high costs associated with developing new, untested solutions.
Incremental innovation allows healthcare organizations to manage risks more effectively. By making small, continuous improvements, healthcare organizations can test and refine their solutions over time, reducing the risk of failure.
For example, a report by the World Health Organization (WHO) shows that incremental innovation helped in the development of the Digital Health Atlas 11. The platform has improved access to digital health capabilities in developing countries.
Examples of Incremental Innovation in the Healthcare Industry
Incremental innovation is not a new concept in the healthcare industry. Several healthcare organizations have leveraged incremental innovation to improve patient outcomes, streamline processes and services and save costs.
Telemedicine has become increasingly popular during the COVID-19 pandemic, with healthcare organizations implementing incremental improvements to their telemedicine services. For instance, healthcare providers have used wearable devices, remote monitoring tools and video conferencing to provide patients with remote care. Incremental innovation has enabled healthcare organizations to improve the quality of care and reduce healthcare costs.
Electronic Health Records
Incremental innovation has also been critical in improving the efficiency of electronic health record (EHR) systems. Healthcare organizations have implemented incremental improvements to EHRs, such as using artificial intelligence to automate administrative tasks and reducing the risk of errors. Incremental innovation has enabled healthcare organizations to provide more efficient and accurate healthcare services while reducing the risk of costly errors.
Tip 4: Optimize Innovation Processes and Governance
The healthcare industry has always been one of the most critical sectors of the economy, with constant demand for innovation, even during times of economic uncertainty. With the COVID-19 pandemic causing a global recession, it has become even more critical for healthcare organizations to optimize their innovation processes and governance to maintain their competitive edge. In this section, we will discuss the importance of optimizing innovation processes and governance during a recession, provide examples of how healthcare organizations can streamline their innovation processes and governance, and explain how optimizing innovation processes and governance can help healthcare organizations achieve their innovation goals more effectively.
The Importance of Optimizing Innovation Processes and Governance during a Recession
During a recession, organizations in the healthcare sector need to ensure that their innovation efforts remain focused and aligned with their strategic objectives. This is where optimizing innovation processes and governance comes in. By streamlining innovation processes, healthcare organizations can reduce costs, increase efficiency, and accelerate the time-to-market for new products and services. Effective governance, on the other hand, ensures that innovation efforts are aligned with business objectives and regulatory requirements.
The healthcare industry is a resilient one, even during tough economic times. According to Forbes found that healthcare was one of the few sectors that experienced job growth during the economic downturn 12. Startups in healthcare may be well-positioned to benefit from this trend and create jobs. This is due in part to the fact that healthcare is a necessity that people cannot do without, making it less susceptible to changes in consumer demand.
Healthcare innovators must adopt a disciplined innovation approach to successfully navigate budget constraints and develop innovative healthcare solutions. This involves going beyond the basics and focusing on key strategies that will set them apart. One such strategy is to prioritize user-centered design, involving end-users throughout the development process to ensure that solutions meet their needs and preferences. By doing so, innovators can create solutions that truly resonate with their target audience, leading to increased adoption and improved patient outcomes.
Another critical strategy is to foster collaboration with stakeholders, such as healthcare providers, payers, and regulators, to ensure that solutions are aligned with industry standards and compliant with regulations. This can help innovators build credibility and trust with key stakeholders, leading to increased adoption and sustainability of their solutions.
Innovators must embrace a culture of experimentation and iteration, constantly testing and refining solutions based on feedback and data. By taking a data-driven approach to innovation, innovators can optimize their solutions for maximum impact and value.
To guide their innovation journey, healthcare innovators can adopt the disciplined innovation lifecycle process 13. To truly excel in healthcare innovation, innovators must prioritize user-centered design, foster collaboration with stakeholders, and embrace a culture of experimentation and iteration. With the right mindset and approach, healthcare innovators can drive meaningful change and shape the future of healthcare.
Streamlining Innovation Processes and Governance in Healthcare Organizations
Healthcare organizations can streamline their innovation processes and governance in several ways, including:
Implementing Agile Innovation Frameworks
Agile innovation frameworks allow organizations to quickly adapt to changing market conditions, reduce waste, and improve collaboration among teams. By adopting agile methodologies, healthcare organizations can shorten the time-to-market for new products and services, reduce costs, and improve customer satisfaction.
The adoption of agile methodologies by healthcare companies has led to a significant improvement in the performance of their teams, as per recent research. According to a survey of executives 14 in these organizations, 75% of them have witnessed a notable difference in the output and efficiency of their agile teams in comparison to traditional teams. This shift towards agile methodology is not just a mere trend but a result of its successful implementation. The Agile approach has provided healthcare companies with a flexible and collaborative framework that encourages innovation, experimentation, and continuous improvement. This leads to better results and outcomes for both patients and the healthcare organizations.
Adopting agile principles in healthcare has many benefits. For instance, agile teams can respond more efficiently to changes in the market, patient needs, and regulatory requirements, thus increasing the organization’s adaptability and responsiveness. Moreover, agile teams can foster a culture of collaboration and transparency, leading to higher employee engagement and retention.
Embracing Digital Innovation
Digital innovation involves leveraging emerging technologies such as artificial intelligence, the internet of things (IoT), and blockchain to create new products and services. By embracing digital innovation, healthcare organizations can improve patient outcomes, reduce costs, and enhance operational efficiency. According to World Economic Forum “The majority of healthcare providers across 14 global markets are now investing in digital health 15. The top priorities are preparing to respond to crises and facilitating a shift to remote/virtual care.”
Investing in Innovation Governance
Innovation governance involves establishing policies, procedures, and frameworks that guide the innovation process. By investing in innovation governance, healthcare organizations can ensure that innovation efforts are aligned with strategic objectives and regulatory requirements.
Companies that invest in innovation governance tend to have higher success rates for their innovation projects. For example, Medtronic, a leading medical device company, implemented an innovation governance framework that helped the company reduce costs, improve quality, and accelerate time-to-market for new products.
Tip 5: Communicate and Engage with Stakeholders
In the healthcare industry, innovation is crucial to meet the ever-evolving demands of patients and improve the quality of care. However, during a recession, innovation initiatives may be deprioritized, and funding for such projects may be cut back. In such a scenario, effective communication and engagement with stakeholders become even more critical.
Importance of Communicating and Engaging with Stakeholders during a Recession
Stakeholders play a crucial role in the success of innovation initiatives in healthcare organizations. They include healthcare providers, patients, investors, regulators, and policymakers. During a recession, stakeholders may have concerns regarding the feasibility and impact of innovation projects. Effective communication and engagement can help to address these concerns and build support for innovation initiatives.
Furthermore, stakeholders may have valuable insights and expertise that can help healthcare organizations to refine their innovation strategies and prioritize projects. Engaging with stakeholders can help healthcare organizations to tap into these resources and ensure that their innovation roadmap is aligned with the needs and expectations of all stakeholders.
Examples of Effective Stakeholder Communication and Engagement in the Healthcare Industry
There are several examples of effective stakeholder communication and engagement in the healthcare industry. The World Health Organization (WHO) has emphasized the importance of engaging with patients and communities to improve the accessibility and quality of healthcare services. In the context of innovation, engaging with patients and communities can help healthcare organizations to identify unmet needs and design solutions that are patient-centric.
Harvard Business Review has also highlighted the importance of engaging with regulators and policymakers to ensure that innovation initiatives comply with regulatory requirements and align with healthcare policies. The Healthcare Information and Management Systems Society (HIMSS) have emphasized the importance of engaging with healthcare providers to ensure that innovation initiatives are feasible and scalable. Engaging with providers can help healthcare organizations to understand the operational and clinical implications of innovation projects and design solutions that are practical and effective.
How Communicating and Engaging with Stakeholders can Help Healthcare Organizations Build Support for their Innovation Initiatives and Ensure their Success
Effective communication and engagement with stakeholders can help healthcare organizations to build support for their innovation initiatives in several ways. Firstly, by engaging with patients, communities, and providers, healthcare organizations can ensure that their innovation initiatives address real-world problems and have a positive impact on healthcare outcomes. Secondly, by engaging with investors and regulators, healthcare organizations can demonstrate the potential of their innovation initiatives and secure funding for them. Thirdly, by engaging with policymakers, healthcare organizations can influence healthcare policies and regulations to create an enabling environment for innovation.
Effective communication and engagement can help healthcare organizations to ensure the success of their innovation initiatives. By engaging with stakeholders throughout the innovation lifecycle, healthcare organizations can gather feedback and refine their solutions iteratively. This can help to avoid costly mistakes and ensure that innovation projects are aligned with the needs and expectations of all stakeholders.
Navigating a recession is tough, especially for healthcare organizations trying to keep their innovation roadmap on track. Prioritizing innovation initiatives based on business value, leveraging existing capabilities and partnerships, focusing on incremental innovation, optimizing innovation processes and governance, and communicating and engaging with stakeholders are all critical to ensure innovation efforts remain a priority during tough economic times. By implementing these tips, healthcare organizations can continue to drive value, improve patient outcomes, and achieve their innovation goals.
Innovation is the lifeblood of healthcare organizations, and it’s essential to stay committed, agile, and focused during a recession. With the right partnerships, capabilities, and mindset, healthcare organizations can navigate the challenges of a recession and emerge stronger and more resilient than ever before. So, let’s keep innovating and making a positive impact on the world of healthcare.
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Mouttham, A., Nida, N., Mouttham, Y., & Glaser, J. (2022). The Role of Telemedicine in the Delivery of Comprehensive Health Care. Frontiers in Medical Technology, 4, 958571 ↩︎
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