The best medicine for healthcare innovation | KPMG | GLOBAL

The best medicine for healthcare innovation

The best medicine for healthcare innovation

Mention the words “innovation” or “change management” to a healthcare professional and you’re bound to get an eye roll. These and other buzzwords abound in an industry that is plagued by technological disruption, frantic takeover activity and decades-old, calls for reform. Few argue against innovation and there’s a clear consensus for health policies that improve access to services, enhance quality and efficiency, and allow for greater patient choice. Globally, healthcare institutions tout their moves to be more “patient centered,” “vertically integrated,” and “technology enabled.” Yet large-scale transformation still faces resistance.


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“It’s you, not me” thinking may be to blame. Healthcare professionals agree the system is broken, but their own role in the revolution is less clear. According to a recent KPMG International survey, nearly three-quarters (73%) of worldwide healthcare leaders believe that change is necessary in the health system, but only one-third (35%) feel that change is needed in their own organization. Identifying the need for change is easy; getting each organization to sign up for their part in it is not.

According to Dr Mark Britnell, chairman ofthe Global Health Practice at KPMG International and senior partner, KPMG in the UK, major barriers to sustainable, systemic change are organizational myopia; a focus on transactional reforms instead of transformational ones; and an ill-defined communication strategy that fails in empowering workers to challenge the status quo. “The inability to get groups of senior health leaders from different sectors—purchasers, primary care, community care, hospital care or patients’ groups, and professional regulators—together to imagine what sustainable change looks like thwarts any serious attempt to transform care,” he says.

Three ingredients feature prominently in Dr Britnell’s recipe for transforming health systems:

1. Consistent vision and staying power

“We need a series of changes that march toward a shared vision,” says Dr Britnell. “This is the paradox of change: it requires continuity.” This vision requires reining in costs while maintaining a high standard of care. To date, those making progress on this front are integrated managed-care organizations where large hospital systems offer their own insurance. After all, a doctor is far less likely to order an unnecessary test if her employer holds her accountable for costs. Moreover, the integrated managed-care structure eliminates the problem of a middleman insurer influencing care decisions.

Regardless of the organizational model, however, there is no hope for sustainable change without a consistent purpose—this is the essence of the paradox of change. US-based Geisinger Health System, for example, has had only five chief executives in its 100 years of business. Over the past 15 years and through the leadership of its recently retired CEO Glenn Steele, the health system has developed a method of examining the performance of each of its specialty areas. Through Geisinger ProvenCare, clinicians in a given specialty examine their own outcomes, analyzing for themselves what works and what doesn’t. This self-analysis has helped enforce their own standards for improved outcomes. The organization has applied the ProvenCare method to chronic conditions such as diabetes, coronary heart disease and hypertension. Furthermore, Geisinger aligns incentives across the healthcare continuum. Payments are bundled, thereby incentivizing the organization to get care right the first time. A compelling vision needs to be shared in a way that sustains motivation, says Dr Britnell. Geisinger “had the audacity to change the way healthcare is provided and paid for in America and it has reduced costs and made substantial improvement to care quality and in-hospital mortality,” he notes.

2. Improvement science

Improvement science focuses on the strategies that work best for a particular organization. The theories and methods for the research may be new and still developing, but healthcare systems that have created sustainable change—whether in Japan, Israel, the US or UK—are already adopting these strategies. Referred to in various terms (such as Six Sigma, lean value reengineering, business process reengineering), improvement science in healthcare involves changes at the macro and micro levels to “do better things” rather than “do things better.”

In India, for example, private healthcare chains Narayana Health and Aravind Eye Care System have implemented key changes proving they can contain costs without compromising quality. Narayana Health’s 5,000-bed cardiac surgery and cancer care center disperses costs among as many patients as possible. Narayana has also centralized support services (such as teleradiology) through a hub in Bangalore. At Aravind, doctors operate in assembly-line fashion to perform 1,000 to 1,400 eye surgeries per year, compared with an average of 400 among US ophthalmologists. Taken together, these “lean” management techniques have widened access to essential services. 

3. Supportive environment

High-performing organizations not only embrace innovation but also appreciate that the initiatives are built on a platform of strong managers. Human resource management in many health systems is transactional, traditional and risk averse, lacking strategic perspective and rarely challenging current practice, Dr Britnell says. “Failure in this area can fatally undermine staff commitment to the values of the organization and support for its leadership,” he notes.

Other factors that build an enabling environment for systemic change include the right financial incentives, a progressive educational culture, proportionate regulation and a strong information technology platform. When KPMG International conducted a crowdsourcing research project among 65 healthcare leaders across 30 countries, respondents overwhelmingly agreed that data is the main driver for transformation. “You need a sensible scheme, one that can be sustained by very good information systems,” Dr Britnell notes.

Israel, for example, has had a single national system of patient records since the early 1990s, as well as one of the strongest HMO and primary care systems in the world. Under Israel’s National Health Insurance law, all citizens are required to be members of one of the four existing HMOs. One of them is Clalit, which runs 14 hospitals, and over 1,200 primary and specialized care clinics. With its national system of patient records, Clalit has been able to integrate people’s information across the services it runs and pays for—from primary care, to hospitals, to nursing homes. Israel’s tech-savvy population is treated as an asset for efficient use of health data, rather than a complicating factor. What’s more, 60% of pediatric consultations now take place remotely over video-enabled smartphones. 

Healthcare globally is at a crossroads, as the potential for social instability from inequalities in care is high. The magnitude of health financing challenges suggests that incremental solutions are not enough. A shared vision of new models and more collaboration within the industry is necessary if health systems are to thrive rather than merely survive. As medical tourism grows, a rising number of global consumers are demanding better treatment for less money. Existing healthcare providers will have to adapt or lose out to other businesses seeking to chip away market share. The technology industry, for example, with its wearable devices that measure fitness activity, sleep patterns, body temperature and heart rate, is producing data for consumers and providers to manage better health.

In fact, the true disruptors in healthcare may come from other industries. Samsung, a world leader in consumer electronics, founded Samsung Medical Center in South Korea 21 years ago. The 1,982-bed hospital and cancer care center marries technology with medical services, with an emphasis on patient satisfaction. Through its “Happinnovation 20*20” program, the facility aims to improve the quality of life of its patients through medical innovation—doing for healthcare what the company has done for the TV and mobile phone markets. Moreover, in the US, walk-in clinics of retail pharmacies such as CVS and Walgreens are already providing healthcare services. Since patients are increasingly paying higher deductibles before insurance kicks in, they are going to such pharmacies for minor ailments and simple tests, where the prices are clear and service is quick. The supermarket chain Walmart, with many in-store pharmacies, has signaled its intention to become a leading seller of lower-cost health services.

For traditional providers this may seem like a threat, but it is also an opportunity to transform their businesses and widen their share of the market. Healthcare executives can drive this change by ensuring that clinical staff own and steer program development, Dr Britnell says. Building a successful and efficient health system comes down to the strength of strategic planning, the communication of a clear vision and the ability of clinicians and executives to rise to the challenge of change.

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