Business Innovation in Healthcare: If Not Now, When?
There’s an old saying that necessity is the mother of invention. If that is true, then healthcare has some interesting and exciting times ahead. Around the world, modern healthcare systems have never before been put under the kind of pressure they have faced through the COVID-19 pandemic. What kind of innovations in service organisation and delivery can we expect to emerge as a result?
COVID-19 has certainly been a game changer for healthcare. But in truth, the need for innovation and reform has been starkly apparent across the world for many years now. Healthcare expenditure has been accelerating at an unsustainable rate for too long. According to the WHO, global spending on healthcare increased by 3.9% a year between 2000 and 2017, 30% higher than overall economic growth.
Low and middle-income countries are seeing healthcare eat into national budgets at an even faster rate, 7.8% and 6.3% a year respectively. At the same time, public funding for healthcare has grown steadily compared to private or ‘out-of-pocket’ payments. All in all, that adds up to health spending taking a bigger and bigger slice of national budgets. That’s not a situation anyone can afford to maintain for very long.
There are many reasons for these trends. On the positive side, the fact that healthcare spending has grown significantly in low and middle-income countries over the past 20 years reflects a general improvement in medical services. In addition, the fact that it is public spending that has grown most significantly suggests there has been a much greater focus on making healthcare provision available to populations at large, not just those able to pay at point of delivery.
But pouring more and more public money into healthcare can only go so far. Low- and middle-income countries might have the best intentions about ensuring every citizen gets the best care available, as and when they need it. But they have to work within the constraints of limited resources. Even in the world’s richest countries, factors like ageing populations create a huge strain on available resources. People living longer is a sign of success for public health policy. But it also creates an added burden in terms of having to cope with the more complex care needs of older citizens.
The key for healthcare providers the world over is to continue in their quest to improve the quality and reach of services, but to do so within the bounds of available resources. In other words, we have to find ways to do more with what we have got, by being smarter with the resources at hand. That’s where the need for strategic and operational innovation comes in. The conventional organisation of healthcare services is no longer efficient enough to meet the demands being placed on it and is insufficient to meet the challenges of the future.
Easing the burden on hospitals
Hospitals are the key battle grounds where these anxieties over healthcare spending are being played out. On the positive side, modern hospitals are a testament to the great leaps forward that have been made in medicine over the last half a century. Barely recognisable from the infirmaries and sanatoriums of old, today’s hospitals symbolise our scientific determination to beat illness and delay death and are equipped with all the technological know-how at our disposal to do so. As the frontline in our fight against death, disease and disability, they form a hub of medical specialization, combining dozens of services, from emergency care to medical training and research, all under one roof.
This also makes modern hospitals highly complex institutions to run, presenting practitioners and administrators with notoriously difficult logistical challenges. In short, hospitals are in danger of being inundated by their own sophistication.
For example, bigger, better hospitals are capable of treating more patients, and we have seen a steady increase in admission numbers over time in line with improvements in services. But that brings with it the challenges of maintaining an efficient patient flow. Particularly when emergency admissions rise, there is often not room on the wards to give everyone who needs one a bed, leading to overcrowding at the front end of the system. In the UK, emergency admissions doubled in a decade to 2016, with the percentage of patients presenting with chronic medical conditions trebling.
The question of how to accommodate such rapid increases in demand in our hospitals has led to two broad schools of thought on what the solution might be. One focuses on improving patient throughput, moving people through the system more quickly and efficiently in order to free up capacity for more patients. This approach takes aim at factors like length of stay and so-called ‘bed blocking’. The second and perhaps more radical approach focuses on the number of admissions themselves. From this point of view, the argument is that we are trying to do too much by relying on hospitals to deliver so much of our care. The best way to create more efficient, cost-effective and patient-friendly services is to trim down the numbers heading to hospital full stop and look for alternative models of treatment and care.
The opportunity for innovation
The latter way of thinking is a marked departure from the standard model of healthcare planning and strategy that has dominated for several decades. But the need for innovative thinking when it comes to the organization of healthcare services has been given a completely new impetus by the COVID-19 pandemic. On the one hand, hospitals have had to pivot very quickly to free up resources and find spare capacity to cope with the acute needs of patients made severely ill by the virus, most obviously in terms ensuring there are enough ICU beds and ventilators available. On the other hand, hospitals have also had to take radical steps to minimise the number of admissions made in order to maintain adequate social distancing and prevent the transmission of the virus between patients and staff.
The ways in which hospitals and healthcare systems in general have responded to the urgent demands of this crisis demonstrate perfectly the type of operational and strategic innovation required to address the longer-term challenges we face, namely spiralling demand and costs. Instead of basing medical intervention on in-person appointments and consultations, COVID-19 has given us a chance to see how effective telemedicine can be. By improving the availability of online advice and information, scaling up use of remote consultations via video link, introducing digital triage systems to decide on actions before patients need to attend a hospital or clinic and other measures, hospitals have demonstrated an ability to drastically reduce admission numbers almost on demand.
All of this feeds into the vision of the ‘smart hospital’ of the future. A smart hospital is a digitally enabled hospital, which in itself is part of a much bigger digitally enabled healthcare system. Smart hospitals and smart healthcare describe a vision of medical service provision which combines data, digital communications, Artificial Intelligence (AI) and cutting-edge interventional technologies to not only provide a better standard of care, but also to make delivery more efficient.
A key aspect of this is to use data and AI-powered decision-making tools to target medical intervention more precisely to where it is really needed. This starts with deciding who really needs to attend a clinic or attend hospital in the first place, and who can best be served via other means — reducing the burden on hospitals and freeing up resources to focus on the quality of acute care. It has been estimated that digitized, ‘smart’ healthcare delivery could slash up to 10% off the healthcare budgets of the OECD nations.
There has been plenty of talk about the need to embrace digital transformation in healthcare for a number of years now. But in truth, digitization will only deliver the desired impact if it is part of a broader programme of innovation and reform which reaches deep into the structure and culture of medical services, too.
For example, the speed and scale of response demanded by the COVID-19 pandemic has exposed the rather rigid annual planning cycles that still dominate in healthcare administration are no longer fit for purpose. What we should be looking towards is a level of dynamic planning that allows services to pivot to the changing circumstances of an increasingly volatile and complex world with sufficient agility without compromising standards. Of course, digitized systems, increased use of data, AI-powered ‘smart’ decision making, and the rest will help with these aims. But they also require a willingness to embrace innovation in the business and administrative side of healthcare above and beyond simply trusting in technology to do it all for us.
It is already becoming a cliché to say nothing will be the same again in the aftermath of COVID-19. But, born of necessity, the pandemic has given us a glimpse of radical innovation in practice, and an opportunity to run with that to reshape the future of provision. The question we should be asking ourselves is — if not now, when?