To be truly innovative you need to create a culture of experimentation.

Have you ever bought anything from Amazon zShops? Probably not.

How about Amazon Auctions? Not likely.

You are not alone because these two massive experiments were quickly scuttled by the retailing giant 15 years ago on the road to hitting their home run with Amazon Marketplace where nearly 50% of current units sold on are from third-party sellers. zShops and Auctions were not failures; rather, the company had to test these two concepts in order to learn how to successfully execute the Marketplace offering. A test and learn culture is critical for innovation not just in retail but in every industry, including healthcare.  

“To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment,” says Amazon’s CEO Jeff Bezos in his 2015 shareholder letter. “Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”

“Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”  – Amazon CEO Jeff Bezos

NextHealth CEO Eric Grossman recently wrote about why it’s important that healthcare leaders transform their organizations into test and learn cultures in his recap of the 2017 Oliver Wyman Health Innovation Summit. There are important lessons in experimentation and cost savings for healthcare industry executives from other industries including retail and financial services.

In a recent discussion during the “Finance Disrupted” event by The Economist, Capital One co-founder and QED Investors Managing Partner Nigel Morris detailed how the competitive advantage for companies today lies not just in having lots of data to run experiments but rather how companies leverage that data for insights by building a test and learn culture. Morris explained it best in his outline of Capital One’s strategy:

“The core idea was that the credit card business is not really the traditional lending business, it’s not really banking at all. What it really is is the leveraging of information in order to be able to put the right product in the right customer’s hands at the right time. The way you did that was in two or three ways. One was amassing huge amounts of data at the customer level and then using experimental design and testing different product and market combinations in order to optimize value to the consumer and net present value to the entity.”

Sound familiar?

You could replace “credit card business” in the above quote with “healthcare industry” and be accurate in describing the opportunity for health plans to build test and learn cultures that better understand and align the right products for the right members at the right time. Capital One now runs over 80,000 tests per year to pinpoint the ideal combination of product, customer, and timing.

For Amazon, Capital One, and a growing number of health plans, when it comes to reducing costs, growing revenues, and improving outcomes, the insights from the tests and how (and how quickly) they are applied are what matter most. Through thousands of experiments, Amazon learned that customers are already using its artificial intelligence framework for early disease detection that saves lives and lowers costs. Through testing and learning, CapitalOne found that people who complete an application in all capital letters pose a higher credit risk (i.e. higher costs). 

Here is how Jeff Bezos described a test and learn approach for Prime Now that was put in place in a matter of months:

“Prime Now offers members one-hour delivery on an important subset of selection, and was launched only 111 days after it was dreamed up. In that time, a small team built a customer-facing app, secured a location for an urban warehouse, determined which 25,000 items to sell, got those items stocked, recruited and onboarded new staff, tested, iterated, designed new software for internal use – both a warehouse management system and a driver-facing app – and launched in time for the holidays. Today, just 15 months after that first city launch, Prime Now is serving members in more than 30 cities around the world.”

How does NextHealth help its health plan customers test, learn and optimize outcomes quickly?

NextHealth’s Measurement and Optimization platform automates health plans’ ability to quickly test, measure and optimize any clinical program. Key benefits include:

  • Faster, data-backed insights allow teams to get to better business decisions quickly and with greater consensus

  • Standardized and consistent analytics methodologies and program set-up help elevate the organization to a shared conversation based on experimentation, building a culture of measurement

  • Automating the ability to test, learn and optimize allows talented analytics and healthcare economics resources to do more with less and operate at their highest capacity

The platform has enabled clients to measure existing programs in as little as 60 days, learning which programs are effective and which are not, gleaning administrative cost savings quickly. New programs, such as reducing avoidable ER utilization, EPDST, HEDIS improvements, and others, can be added to the platform as well, delivering medical cost savings using machine learning to optimize outcomes by assigning members to the programs that are most likely to work for them. NextHealth’s managed services offering, included in every engagement, ensures that clients have access to the learnings gleaned from our experience, furthering speed to value.

Is your organization reducing medical and administrative costs through a test and learn culture?

Our platform accelerates data-driven decisions and enables a culture of measurement. See how.