Strategic Innovation in Health Care

The United States is an unquestioned world leader in medical innovation. The fruits of our creativity can be seen in astoundingly clear MRI images and in expressions on the faces of organ transplant recipients that have regained fulfilling, productive lives.

Medical innovation also creates jobs for US citizens. The medical device and health information technology sectors are particularly hot in this regard right now. Practice Fusion for example, expects to hire nearly 100 new people this year, tripling our current headcount.

And medical innovation creates new knowledge and highly-skilled workers which will prove critical to our nation’s success in an increasingly competitive global economy.

But the news isn’t all good about medical innovation. For one thing, it drives up the cost of health care. Thirty years-worth of public demand for the newest medicines and latest high-tech devices has pushed medical cost inflation far beyond what has been observed in other sectors of the US economy. This spiral was thought to be unsustainable even before the current era of enormous public deficits and sluggish economic growth.

Is it wise to be developing ever more sophisticated – and expensive – imaging technology and surgical implants that have low marginal benefits compared with existing versions? Do we care that such innovations widen access disparities to the highest quality healthcare in our country?

Thought of this way, medical innovation is a double-edged sword: we can cut payment for innovative products that improve care but at a high marginal cost, but doing that will dampen the job creation and knowledge-development that our economy desperately needs.

Is There Another Way?
What we need to do is re-examine how and where we innovate. We need to abandon or at least reduce our focus on "incremental innovation," in which we strive to produce ever-more sophisticated versions of existing technologies, and focus instead on innovations that either reduce the cost of health care delivery or make it more accessible.

Telemedicine, remote monitoring devices and portable ultrasound devices hold promise in this regard. They let more people get treatment, make better use of medical manpower, and shift treatment to less expensive settings.

Beyond this lies something I’ll call Strategic Innovation. Strategic Innovation means redefining business models so as to promote deployment of new products and services at lower costs to providers—and hence the government, which uses taxpayer dollars to pay for them via Medicare, Medicaid, SCHIP and so forth.

This is what Practice Fusion has done by offering a fully-functioning EHR for free to providers. In an instant, our ad-supported product eliminates license fees, training fees, transaction fees and update fees that providers, and ultimately the government, previously had to absorb. In an instant, solo and small group practices can access quality improving, cost reducing EHR technology that had previously been unaffordable for them…and leverage it on behalf of their patients.

There’s more. Practice Fusion’s Strategic Innovation aligns our interests with those of the providers we serve. We don’t get paid unless providers use our EHR, so we listen when providers tell us how we can be better. And we are driven to help providers use the EHR more and more…which is exactly what the government wants.

In contrast, the traditional EHR vendor business model creates few incentives for vendors to be customer-focused. Is it even in their interest to promote utilization of their systems once they have made a sale?

Glenn Laffel, MD, PhD
Sr. VP Clinical Affairs, Practice Fusion