Digital Innovation

How Health Systems Can Disrupt Their Own Business Models

April 18, 2018  |  Providence Digital Innovation Group

We’ve taken you on an 8-piece journey about Providence St. Joseph Health’s digital story including our approach to Digital and innovation, our strategy, some of the investments we’ve made, and the products we’ve developed internally that are digitally transforming our organization. We have shared our learnings with our GeekWire audience as well as over 60 health systems that have come to visit us at our offices in Seattle over the last 24 months.

Throughout these conversations, we frequently hear the following: “Our health system isn’t as large as Providence and we don’t have a 200-person Digital organization. How can we transform our organization?” At PSJH we believe that while having the resources at our disposal certainly helps our cause, there are ways that smaller organizations can drive toward a digital transformation as well.

There are three things that any system who wants to embark on this journey should do:

·       Build a small and capable internal team with a senior-enough leader who can be influential in advancing the transformative cause of Digital throughout the organization

·       Partner with others to judiciously use your resources and move quickly based on existing technology that is at your disposal

·       Take every opportunity to think about not just new technology, but also new business models that technology can enable

Assemble a Small but Mighty Team with Backing of the CEO

We touched on this in our first piece but it merits repeating. A true commitment to digital and innovation can first and foremost be reflected in the hiring of a senior leader that has the power and influence to drive transformation. The work of digital and innovation is not business-as-usual, and often organizations must face internal biases and challenge current ways of doing things. These changes can be difficult to accomplish and need the backing of a senior-leader, as well as the CEO of the organization, to be impactful and effective. Remember, the CEO needs to own and champion the transformation of the organization and empower this team to drive that transformation.

Partner Wherever Possible

There is no need to go it alone, and health systems have the opportunity to partner with four categories of potential partners:

·       Other Health Systems: There are numerous opportunities to work with other health systems. We spend significant time hosting other health systems at our offices in Seattle, going to their offices, and use the opportunity to engage in knowledge exchange about the healthcare problems we’re solving and the technology we’ve built or adopted to address these problems. We also spend time learning from others about their approach to digital and innovation in their health systems. Through these conversations we often highlight potential opportunities for co-development of products or programs. We also borrow ideas wherever we can. Finally, health systems such as Providence St. Joseph Health with capabilities to build technology are commercializing their technology and offering it to others. At PSJH we have developed two technology platforms available to health system partners: Circle, our women’s health platform, our e-commerce platform which powers our Express Careproduct and our ambulatory clinics, and, finally, Xealth, a company we recently spun out in June 2017, which allows clinicians to prescribe digital content, apps, services and products right from the EMR just as they would a pharmaceutical.

·       AVIA: The AVIA team has created an innovation network of twenty-seven (and growing) health systems including PSJH, Dignity, UVA, Northwestern, MD Anderson, Memorial Hermann, Sutter, Piedmont, and others. These health systems use AVIA as an extension of their innovation teams. They leverage AVIA’s understanding of digital strategy and their network of innovators within these member health systems to assist health systems in setting their digital strategy, choosing best-of-breed technology vendors, and executing on implementation and scale.

·       Big Technology Companies: Many major technology companies have built, or are developing capabilities or platforms that health systems can take advantage of in the cloud. These companies have invested significant resources in building platforms upon which others can innovate. This can accelerate the pace by which your health system can also innovate. Furthermore, these companies have achieved enormous scale with consumers upon which health systems can build new products and services.

·       Emerging Digital Health Companies: For many of the problems that health systems are facing, there are digital health startups that are working on those very problems. Engaging with these companies closely can help health systems solve the problems much more quickly.

Enable New Business Models

Finally, and perhaps most importantly, regardless of the resources health systems have, consider the economic models enabled by the partnerships, innovations, and technologies you develop. Creating a business model essentially means finding the value creation metric (a repeated improvement in cost, quality, or new revenue) and making that value creation measurable, repeatable and scalable. Think of a project as a service that delivers measurable value and that you could then hypothetically charge your internal “customer”. While you may have no intention of spinning this service out to sell to other health systems or actually charging your internal customer for the value you have created, identifying the value add and thinking in terms of business model creation makes the new innovation more sustainable and defensible.

Many technologies can enable new business models that work under both FFS and value-based environments. Timing the transition economics of a system’s transformation from volume to value can be challenging and often inaccurate, having significant economic consequences for systems. Focusing on new business models that add value in both scenarios can alleviate the risk associated with attempting to time the transition.

We appreciate everyone who has joined us throughout these last nine pieces about our experience with digital and innovation at Providence St. Joseph Health. We hope this was the beginning of more in-depth conversations that we can engage in collectively while advancing our industry and improving quality of care for our patients in the most efficient way possible.