• How Health Systems Are Making Innovation Their Business

    Innovators: Lauren Phillips Apr 27, 2016

    Three leaders of health system innovation centers say such programs can boost healthcare organizations in various ways.

    Health care is in need of innovation: new tools, devices, and processes that can improve clinical outcomes, patient experience, and the bottom line. Many large health systems are taking the lead in developing and commercializing creative ideas generated by their own clinicians and by outside inventors looking for a source of support.

    Leadership talked with three innovation executives to learn more about the benefits, challenges, and transformative potential of such initiatives for health systems and for the industry in general: 

    Thomas J. Graham, MD, an orthopedic surgeon, is chief health strategy and innovation officer, Tavistock Group, and global chairman, Lake Nona Institute, Orlando. He is the author of Innovation the Cleveland Clinic Way: Transforming Healthcare by Putting Ideas to Work, which draws on his experience as chief innovation officer of Cleveland Clinic Innovations from 2010 through 2015.

    Marc Probst is chief information officer and vice president, Intermountain Healthcare, Salt Lake City.

    Michael Mirro, MD, is chief academic research officer, Parkview Health System, and director, Parkview Mirro Center for Research and Innovation, Fort Wayne, Ind.; and co-director of the Midwest Alliance for Health Education.

    What kind of innovation is your organization involved in?

    Thomas J. GrahamGraham: We launched the formal innovation function in 2000, but innovation was woven into the DNA of Cleveland Clinic from its founding in 1921, and it's given us so many firsts: from blood transfusion and kidney dialysis to cardiac valves and orthopedic implants. We've spun out 76 companies, hundreds of royalty- bearing licenses, and thousands of patent applications.

    Recently, the big splash was Explorys, which we sold to IBM Watson. It's a massive database of deidentified information from across the entire healthcare ecosystem, combined with the world's most scalable performance management platform, which drives improvements in every aspect of medicine and care delivery.

    Probst: Intermountain Healthcare is well-known for Marc Probstbest practices, and that has led to the development of what we call Care Process Models, which provide expert advice in the diagnosis and management of certain medical issues. They're not "recipes" but instead help clinicians optimize decision making. These are available, free of charge, on our website. However, we have collaborated with Cerner to develop two related services that we are in the process of commercializing now: software that automates the models and a consulting service to help people get the best possible results from their use.

    We are also at the forefront of personalized cancer treatment through Intermountain Precision Genomics, which is capable of testing and providing treatment for the greatest number of actionable gene mutation types and which offers advanced next-generation sequencing.

    Michael MirroMirro: Historically we've focused on device and drug development, participating in multi-center trials. But we're also very committed to process improvement. For example, we received a grant from the Robert Wood Johnson Foundation to address adolescent depression and suicide, which is a major problem in Indiana, using telemedicine. We've already modeled some things we think have potential, so now we're in the process of testing them to see if adolescents will find them useful. And we are increasingly involved in medical informatics.

    Why should healthcare organizations be in the innovation business instead of leaving it to outside companies?

    Probst: I think the best innovation comes from the people who actually do the work. We're finding that our clinicians are the ones who provide the most value to the industry. I can't see every hospital doing this—for some of them, it's just not part of their mission. But for those organizations that are larger, that have the resources, and, frankly, some of the most innovative and research-oriented clinicians, I think it's our responsibility.

    Graham: The real advantage of conducting innovation in an academic medical center or other not-for-profit healthcare organization is that the "virtuous cycle" is at play. The crucible of ideation is the bedside or lab bench, but if there's no apparatus in place to nurture that idea, it probably gets shoved in a drawer or thrown away, so no one benefits. When the hospital is capable of seeing the idea through all the necessary stages—for example, engineering, prototyping, regulatory, legal, investment, and ultimate divestment as an external company of royalty-bearing license—that adjacency eliminates a lot of barriers. So that's why we developed a core competency in commercialization and corporate ventures.

    Mirro: Our hope as a health system is that the research and testing we do will benefit our patients, that we improve their care by accelerating not only new product development and commercial ventures but also new process improvement innovations that enhance patients' experiences and outcomes in terms of health and economics.

    For example, in this part of the state we have a cluster of orthopedic device companies that attracts start-ups in that field; those people come to us with their ideas to see how we can help them accelerate their success. This helps the region economically and may bring new technologies to our patients that they would not benefit from outside of an investigational setting.

    What factors are helpful in pushing out new products expeditiously?

    Mirro: Having a clinical test environment—which includes a research center, a center for health innovation to screen and seed projects for Parkview staff, and an advanced simulation center—allows us to really accelerate the development of new products from within the health system. Compare this with a team of engineers that thinks of some innovative product but then has to look around for partners and make their invention a priority for someone else. We're focused internally on our 10,000 employees, but we have innovators from the outside come here to provide advice and referrals to community resources, because the state of Indiana is very focused on the health science space.

    On the regulatory side, the key to getting approval in the shortest possible time is being able to identify regulatory barriers facing the particular type of device or product in question, and knowing how and in what order to approach those barriers. For example, a medication adherence app for either an iOS or Android platform may or may not need to get 510(k) approval, depending on how directly it influences the care of the patient. We know a lot about the [Food and Drug Administration] regulatory process because of the many device and drug studies we do, but we also use our academic partners at the Indiana University School of Medicine and their research technology center to advise us on tech transfer.

    Probst: Having a champion in the C-suite is so important. At Intermountain, that's our CFO, Bert Zimmerli, who's my boss. He understands the financial benefits and risks of innovation, he really knows the industry, and he's personally made it happen. He brought in a small group of us to start the process five years ago, to develop guiding principles and an approach to spur more innovation in the organization; he brought in a vice president for innovation and growth to focus on this function exclusively; and he spearheaded the building of our Transformation Lab, which is all about inviting in new partners, sourcing new creative ideas, and bringing those ideas into the organization.

    Now, Intermountain is a very conservative organization, so it wasn't like selling this idea to the rest of our leadership and board was smooth sailing. We had to do a lot of educating and discussing—Why does this make sense for us? What does it do for us as an organization?—and Zimmerli has been the leader all the way.

    Graham: I'm a big evangelist for process. The difference between being creative and being innovative is putting ideas to work, and that's a nonlinear, arduous, long process. If you don't have the basic architecture or apparatus of innovation, the support system, you've got an uphill battle to move the needle. You need the basic building blocks:

    • An educational model to teach people how to recognize innovation
    • Legal capabilities to protect intellectual property in a patent or trademark
    • Medicinal chemistry for pharma
    • Engineers and a prototyping lab for medical devices
    • Coders for healthcare IT

    You also need people who understand market needs, can identify potential investors, and know how to get a favorable deal structured.

    What are the barriers and challenges in getting innovations to market?

    Probst: It took Intermountain two to three years just to achieve a shift in attitude to where we will permit ourselves, as an organization, to be in a commercial venture outside of our core business and mission, which is care delivery. It wasn't so much a matter of resistance—the culture of innovation has been there all along—but we'd always given it away. We've had to work hard to build a business-oriented environment and a team that can take ideas from our busy clinicians and commercialize them.

    We still believe in imparting our knowledge freely. But we've learned that for our innovators to be really successful, we need to invest money, and that we could actually do a better job of that if we charged for some of these things.

    In tandem with that is building an expertise internally that allows us to identify powerful concepts, build prototypes, and find capital to move them forward. We're not experts yet, but we're making strides in the right direction. We're putting a basic foundation in place to make it possible for us to nurture ideas from inside and outside the organization.

    Mirro: Sometimes we have difficulty identifying the right population to test a product or care path. Let's say we want to study a technological solution to problems facing lower-income patients with diabetes, such as sticking with a healthy diet and filling expensive prescriptions. Data mining the system for such a narrowly defined group can be challenging; for one thing, there are competing priorities for our technical and human resources. So we're working closely with our [information systems] team to come up with simpler analytic tools.

    Another challenge is educating staff in what they need to do to bring an innovation to reality; most ideas come from the bedside, so we want to unleash the creativity of nurses and physicians. We provide entrepreneurial coaching—we're currently developing a more sophisticated curriculum—but it's a lot of hard work.

    What kind of outside partnerships are important?

    Graham: You know the fishing's always better in muddy water, and the seas of health care are certainly roiling now—we have to do better, help more people, and do it faster and with more fiscal responsibility. And I think innovation is going to be the margin of difference. Innovation is an amazing platform for collaboration—it can take former competitors and turn them into collaborators, it can take vendor-client relationships and turn them into partnerships—and we need to democratize it. If a hospital has invested in an innovation apparatus and a doctor working at a hospital across the street has a great idea, if they don't share, then everybody loses.

    We did that very tangibly by developing the Global Healthcare Innovation Alliance, which has allowed Cleveland Clinic to share its capabilities with major universities like Notre Dame, commercial partners like Cox Media, and government- sponsored research centers like NASA.

    There's also a real capital gap in innovation today. I have 50 patents, and each one cost more than $100,000 to develop and protect. It's a misconception that the venture capital or private equity community is just standing by to dole out money, especially at the pre-commercial level of funding, when you need a few thousand dollars to get something off the drawing board. Luckily, Ohio is a very forward state when it comes to business and had two funds that were very instrumental in the growth of CC Innovation: Ohio's Third Frontier Fund and Jobs Ohio gave critical capital at some of the hardest times.

    Probst: I don't know that health systems or hospitals make the best vendors in the world. Our mission is health care—serving our communities and helping people live the healthiest possible lives—and vendors need to be more focused on how to generate revenue or, for those that are public, increase their stock value. We definitely add credibility to any of the products or services we might develop, but we'd rather have a vendor lead the commercialization part of innovation.

    We invested in an incubator group called HealthBox, which provides a structured framework that helps employee inventors and entrepreneurs determine the commercial viability of their business concept, validate the market opportunity, identify product development or service needs, and develop a plan for growth, including go-to-market strategy and funding needs.

    And we have a true collaboration with Cerner: We leverage their technology to automate our Care Process Models, and we're building pieces of that initiative specifically to fit into that technology. We will benefit from their customer base, and the software will help their customers—hopefully, both ships will rise.

    Finally, what are the benefits to the organization?

    Mirro: We have a very liberal intellectual property policy that ensures that Parkview inventors benefit financially—typically by licensing a new tool or idea to a commercial entity—with the health system taking a small piece of that to help renew the seed-funding process. For example, an algorithm or pathway to manage a chronic disease might have tremendous value for a large private payer, which could really put the innovation on steroids and launch it.

    We look at clinical outcomes but also, particularly with process improvement, at economic outcomes. A product might not have a direct health benefit as far as reduction of mortality, but it might improve the patient and family experience and provide an economic benefit in the form of cost avoidance.

    And, of course, our involvement in so many clinical trials spurs creativity among our physicians and other clinical staff.

    Probst: The biggest benefit for Intermountain is not yet financial, nor is that the primary reason we got into innovation. We got into it to create an attitude and an excitement around innovating, because we believe that fostering innovation and supporting people who come up with better ways to provide care and better tools is a major part of health care—and that's the best thing we're getting out of it.

    It also starts to get us into the right circles. People are approaching us now who may not have approached us in the past. New start-up organizations that have exciting solutions are coming to us and asking us to work with them. We bring them in, we pilot their inventions, we share ideas on how to improve them, and that's really helping us provide better care.

    For example, there's a company called Velano Vascular that's created a needle- free device that fits into a port so you can draw blood from a patient whenever you need to and do other things that typically involve needlesticks. We tested early versions of the product, we gave them feedback, and we're piloting it now in three hospitals. My bet is we're going to be a big-time user of this device, and that's great for our patients. We won't benefit financially in a direct way but indirectly in many ways.

    Another example is Sotera Wireless. We've been working on and off with them for four years on a wearable vital-signs- monitoring device. We believe this could be successful, and we could realize some financial benefit from that eventually, but, again, we got engaged with the company because we came to feel strongly that this was a good thing for patient care.

    Graham: Innovation can be a great way for a hospital to augment its bottom line with nonclinical revenue—royalty-bearing licenses, sales to companies, spin-off companies. And if somebody's ideas make a difference to the bottom line, that boon should be shared. We've returned $90 million to on-campus inventors since 2000, writing seven-figure checks to some of them. That's a very powerful incentive and a very powerful recruitment and retention tool—and an amazing advantage for our organization.

    The patients win, they get the newest therapy; the inventor wins, the institution wins, and chances are some jobs are created.


    Lauren Phillips is president of Phillips Medical Writers, Ltd., Bellingham, Wash., and a frequent contributor to Leadership.

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