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The Healthcare Innovation Salon: London 2024

Meeting Summary: Digital Transformation of Healthcare. Why aren’t we there yet?

 

May 6, 2024

London, GB

The following is a summary of the principle ideas expressed and shared at a dinner organized by the hosts in London, in May of 2024. The idea was to bring together people from different sectors of the healthcare ecosystem and ask them to provide their perspectives on what was hindering the digital transformation of healthcare in Europe and beyond.

While the notes below were reviewed and approved by all the authors, they are nonetheless an abbreviated outline of the ideas shared and annotated by me. In some instances, I fact-checked the statements and provided some references. However, these notes may not capture all the details and nuances discussed and do not express a unanimous consensus opinion on each topic. Rather, they can be construed as useful jumping points for a deeper discussion and thoughtful conversation about digital transformation in healthcare.

We hope you find the content thought-provoking.

Sincerely,

Stefano

June 24, 2024

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Present

Giovanni Monti (Host, Strategic Advisor, founder of Option 5 Health, visiting senior fellow LSE,  ex-Senior Vice President, Healthcare Services, Walgreens Boots Alliance)

Laura Monti (Host, PR Healthcare consultant)

Stefano Bini, MD (Moderator, Professor UCSF, Founder DOCSF.health, AI researcher)

Tom Harte,MD (Entrepreneur, Founder MSK.ai)

Lorenzo Targetti (Emoled, Investor)

Dr. Taran Toor, MD ( Head of Wellness and Innovation, Holland and Barrett – retailer)

Eric Rodriguez Machado (Head of Strategy, Cigna EU and Global Segments)

Executive Summary

The meeting focused on the driving forces behind digital transformation in healthcare, highlighting the crucial role of technology, the challenges posed by market fragmentation, cost considerations, patient empowerment, and the importance of a buyer-centric approach to innovation. Key recommendations included innovating procurement mechanisms, implementing a centralized, problem-based model, downsizing technology, establishing a centralized digital infrastructure, encouraging parallel private models, and utilizing middleware platforms to aggregate buyers.

Key Themes and Insights

 

1. Technology as a Driver for Change: The tech is not the problem.

– Technology will drive change, particularly in inefficient practices. However, tech is no longer the hard part. It’s not the technology in and of itself that’s challenging but integrating it with people and processes. Furthermore, having advanced technology that is integrated with people and workflows is also not sufficient, one has to ensure that the tech is both affordableand accessible. Concerns were raised about whether the current technology offerings are “too good” (ie, complicated) for the market. The question was asked about who would bear the cost of such advanced technology. The point was made that before any tech implementation, one should ask the simple but important question: if X is the problem and Y is the solution, why do we need to solve X with Y now?

2. Fragmentation in Healthcare: Digital transformation to the rescue?

– Fragmentation in the healthcare sector, is a significant barrier to the rapid deployment of innovation. We also recognize that, especially in Europe, local governments still have control over local regulations and funds flow. Digital solutions, which operate in the data space rather than the physical space with its myriad legacy hardware models and political overtones, may reduce fragmentation and bypass historical powerbrokers by working in a shared, cloud-based environment. Digitalization can transform healthcare from a local to a national, continental (e.g. European Health Data Space) or even global market in ways that can not happen in the traditional analog environment. This is a strong argument for government investments to support unified and standardized digitalization of their healthcare system over trying to overlay technology on a failed system.

3. Pharma Costs: How do you innovate with Pharma?

– The growing high cost of pharmaceuticals – which has essentially doubled in the US in inflation-adjusted dollars per capita from $573 in 2000 to $1147 in 2023 (1), and is forecast to approach 10% of total National Health Expenditure in the United States (2,3) – adds pressure to the already high annual medical inflation in the US (4) and across the world or around 5-6%. Innovation in managing pharmaceutical spending needs to be part of the solution.

4. Innovation: Proof of ROI.

– With regards to innovation, it was suggested that, given the pressures health systems are currently facing, any healthcare innovation must demonstrate a return on investment (ROI) within a year to be viable and gain traction, challenging the traditional long-term ROI models commonplace in healthcare. This is a high bar but reflects the funding realities on the ground. Lastly, it was commented that technology, in the end, needs to add easily quantifiable value, and sometimes innovation (digital innovation in particular) is too complex to add value in a way that can be easily measured or attributed to the funding source.

5. Empowering Patients to Develop Dual Healthcare Systems: Is HC too broken to fix?

– Empowering patients to create a parallel healthcare system was discussed as a possible reaction to the ineffective incumbent system (think Netflix vs. Movie Theaters – theaters could not meet people’s need/ desire for at-home entertainment on demand). An example is from the UK where participants noted that patients are increasingly seeking care outside the public system (NHS) for chronic or non-acute conditions, accepting that out-of-pocket payments are necessary for many procedures, an unthinkable breach of the social contract brought on, in large part, by the economic slowdown, underinvestment in the public sector, and unacceptable waiting lists (5).

This particular scenario is not unique to the UK. It is experienced in other countries where the sheer size of the healthcare system makes it inherently incapable of quickly responding to fluctuating needs, such as in Italy where waiting lists for certain procedures are so long that a thriving private system is in place. This shift creates an opportunity for the private provision of healthcare – be it funded or reimbursed by public payors or offered through direct-to-consumer models –  and highlights the growing market for consumer-centric, consumer-driven care. In the US similar models are gaining traction and follow a trajectory presaged by Clay Christiansen in The Innovator’s Prescription. In that book, Christiansen prescribed a centralization of high acuity high-cost services into hospitals and a decentralization of all other healthcare services to patient homes or other, low-cost entry points (for example: the pharmacy). Another example of how patient demands can drive an entire market is the GLP-1 phenomenon which is an example of how end users are willing to embrace innovations that somehow “go around” the system to get the care they want/value and do so in the way that is most convenient.

6. Middleware Platforms for Innovation: Creating a problem-centric procurement playground.

– There was a discussion around the need for a “middleware” platform to bridge the gap between startups and the healthcare sector. Such (a) platform(s) would facilitate the testing of new ideas and technologies, promoting translation and connection between various stakeholders. Middleware platforms could enable various entities to clearly outline their shared needs and allow innovative startups to build solutions specifically targeted at existing pain points for which there are established buyers. We also discussed the idea of this middleware platform to support both innovators and buyers navigate long-term contracting. Ultimately there are many routes to pilot innovative approaches, however, the path to drive adoption at scale within existing systems in Europe is far more complicated and would benefit from innovative approaches in procurement models.

7. Buyer-Centric Innovation: Start with the Problem, not the Solution.

– Successful innovation should begin from the buyer’s perspective, addressing the human aspect (workflow, adoption, change management) and the specific real-world problems (risk assessment, diagnostics, resource allocation) it solves. Technology-specific innovation tends to create “tech first point solutions” which are then adapted to the market in what is often referred to as “technology looking for a problem to solve” situation. These companies offer limited value to small verticals and struggle to scale once in the market. Mergers and acquisitions (M&A) or strategic partnerships between multiple-point solutions can help tech companies create a larger ecosystem of solutions and thereby reach the market more effectively.

8. Innovation Funding Models: How to drive innovation that “sticks”?

– Currently, governments and other funding agencies provide money for health innovation through grants. However, in some cases, there is no payment or funding model to support the distribution and adoption of these innovations once created. A new model was proposed to address this problem, in which grants or funds would be provided to hospitals and other healthcare organizations only if they take financial risk along with the funding agency. This process would de-risk innovation and help ensure that the requesting organization was sufficiently committed to the innovation to ensure that the project could be self-sustainable at the end of the grant*.

A related idea was discussed whereby incentives could be put in place where hospitals would be allowed to go “at risk” with start-ups so that if a given solution is successfully integrated and the hospital benefits, the start-up receives a pre-agreed proportion of the revenue stream/savings that the hospital sees. Governments can also help by driving innovation through established channels and building enabling digital ecosystem (think favorable taxing, banking, as well as regulations and data infrastructure)l.

Conclusion:

The meeting highlighted the potential to redesign healthcare systems in a more personalized preventative way thanks to digital, AI, and other innovations coming to market. Yet, it also highlighted the complexity of driving transformation at scale in healthcare, particularly through existing channels developed over the decades across overstretched national healthcare systems. Emphasizing the need to develop affordable and accessible technology, address fragmentation through digitalization, ensure quick ROI and sustainable business models, empower patients through parallel consumer-centric systems, and create strategic centralized and innovative models to support transformation, we outlined several critical steps to enable digital transformation of the healthcare sector. A buyer-centric approach to innovation, supported by middleware platforms to test and implement novel ideas, and an effective and enabling M&A ecosystem can help realize the potential of technological advancements, ultimately improving patient outcomes globally.

  1. https://www.health.org.uk/publications/long-reads/nine-major-challenges-facing-health-and-care-in-england3 Nov 2023 P Dunn et al.
  2. Source: KFF analysis of National Health Expenditures Accounts (NHEA), as published in https://www.healthsystemtracker.org/chart-collection/recent-forecasted-trends-prescription-drug-spending/#Nominal%20and%20inflation-adjusted%20per%20capita%20spending%20on%20retail%20prescription%20drugs,%201960-2021
  3. https://www.ama-assn.org/about/research/trends-health-care-spending
  4. https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet
  5. https://www.healthsystemtracker.org/chart-collection/how-much-is-health-spending-expected-to-grow/#Annual%20change%20in%20per%20capita%20health%20spending,%201970s%20%E2%80%93%202021;%20projected%202022%20%E2%80%93%202031
 
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