Insights from the Oliver Wyman Health Innovation Summit 2017

Eric Grossman, CEO of NextHealth Technologies, recently attended the Oliver Wyman Health Innovation Summit, Nov 6-8 in Dallas, TX. Titled “Industry Interrupted: Delivering on the Promise of Change”. The event convened healthcare industry leaders to discuss disruption in healthcare. We recently sat down with Eric to highlight his thoughts on the event.

What were your three main takeaways from the event?

1. Create a test and learn culture

Being able to test and learn – at scale – is an underpinning of competing in an industry ripe for disruption. Nigel Morris from Capital One provided a great example how taking an experimental approach (i.e. a test and learn mindset) can position a company to not just weather disruption but come out ahead as a result.

Capital One conducted 46,000 test-and-learn experiments in the year 2000 to see which combinations of campaigns, products, messages and offers resonated most with consumers. The company experimented to find out what worked for each micro-segment and created an infrastructure to optimize what was working. They captured the data exhaust on everything they did so they could figure out what worked. They kept failing to find what was successful. Thomas Edison put it well when he noted: “Many of life’s failures are people who did not realize how close they were to success when they gave up.”

2. Support the supply chain

Health plans need to figure out how to derive value and align incentives in the supply chain. The physicians are saying “We have engagement fatigue. You’re calling us. You’re reaching out to us. But we only have so much time in a day. You have to help us prioritize where we can get the biggest impacts in our days.” The way we do that is through the use of analytics, and in particular, both machine learning and prescriptive analytics. Enabling physicians to be more efficient and maximize reimbursement is heavily dependent on analytics.

Prevent engagement fatigue by empowering physicians with better insights on how to maximize their return on time and focus. That will require developing this test and learn mindset.

3. Engage the connected consumer

It’s time to acknowledge and engage the connected consumer, especially the data exhaust from their digital, always-on life. Leveraging this data exhaust in an analytics environment built around the connected consumer is vital. As consumers take on more responsibility for cost, there is now a need for plans to do things other than just ingest claims and generate payments. They need to become a trusted advisor for consumers as they navigate the complexities of managing their own care and cost decisions. Health plans are trying and eager to adjust to this new reality, but to be effective, they need to have a faster, more reliable way to make data-driven decisions and an infrastructure that will help them innovate more effectively.

What’s the “landscape of disruption” look like for healthcare in 2018?

The threat of disruption is real for the healthcare industry. Look at how Amazon is getting into the pharmacy business and paid for the recent acquisition of Whole Foods with a day’s worth of capital market gains. Look at Uber, Square, etc.

Necessity is the mother of invention. We’ve got the right alignment of incentives now. The industry has to innovate because it’s threatened by disruption. At the same time, plans have the data and the membership. They have large enough populations to move the needle and also have the capital to invest in these areas to have real impact, build trusted relationships with their members, and avoid losing market share.

What’s different about the current environment?

Healthcare is unsustainable at its current cost. We (the industry) have been saying that for years so that’s not necessarily groundbreaking, but if you look at the geopolitical dynamics of healthcare you can see that things really are different now. Look at the difficulty Washington has had enacting change despite the enormous costs at stake. The unit costs are unsustainable and companies just can’t afford it anymore. The fact that commercial insurance completely subsidizes Medicare and Medicaid is just not sustainable. In addition, now that consumers are shouldering more of the risk/cost burden, they need help in learning how to better manage that responsibility. That shift creates either real opportunity or potential downfall, depending on how the industry reacts.

How do organizations create a test and learn culture?

First, without strong executive sponsorship and governance to drive a culture of measurement into the organization, the initiative will be doomed. The second priority is to drive standardization and processes around measurement that don’t rely on politics or influence, but rather rely on data and insights as the currency for decision-making. Lastly, creating a “test, learn, and optimize” environment relies on building comfort with a culture of failing a lot more and continuing to understand that failure should be seen as a means to an end instead of just an end.

How are you going to innovate if you don’t have an infrastructure that allows you to test and learn quickly? Remember, analytics is a no-regret investment.

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