When it comes to transforming healthcare, one thing is clear: it's a hot topic.

Most people see healthcare disruption as coming from two sources: government taking a legislative role that reshapes the big picture business model, and grassroots startups using technology to challenge the status quo.

We've seen government's recent struggles to help reinvent the system. Venture capitalists and startups have also been at it, with a cumulative $15.5 billion invested in innovation since 2014 and $3.5 billion invested in the first half of 2017 alone. Despite their best efforts, neither have truly moved the needle.


A different animal when it comes to innovation

The $3 trillion healthcare industry is vast, entrenched, and interconnected to itself and society in a way that makes it a different animal from most other industries. This is especially true when it comes to innovation, since "risk taking" and "failing fast" need to be taken with a grain of salt given that healthcare is all about keeping people safe and healthy.

The history of innovation says that the "disruptors" come from outside the industry. My view is that when it comes to healthcare, there's an overlooked and underestimated source of disruptive innovation that actually may be the secret to transforming the industry once and for all.

What is it? It's the inside of the industry itself.


Driving disruption from the inside out

From GE to IBM to 3M, we've seen a lot of big companies successfully invent and reinvent themselves over the long-term. These organizations have also proven it's possible to lead industry-wide transformation, if you embrace real change.

Here's how the country's largest nonprofit healthcare provider is doing just that - and what anyone else, regardless of their industry, can learn about how to drive disruptive innovation.

As the largest nonprofit health care system in the US, Ascension isn't waiting around for new legislation, Medicare rules, or for the next hungry upstart to blindside its business model. With over 2,500 sites of care across 22 states and DC including hospitals, long-term care, acute care, rehabilitation, nursing homes, community clinics, and psychiatric hospitals, the organization's leadership recognizes that if it doesn't disrupt from within, it will eventually be forced to react - most likely radically - to external threats.

So what is Ascension doing? It's disrupting the healthcare industry - by starting with itself. Over the past few years, Ascension has deployed five strategies that highlight best practices in innovation management, including:


1. Bring the outside in, then scale it up

Ascension knows that external partnerships and collaboration are essential for innovation in today's world. That's why the organization formed the New Virtual Market Development & Incubations group. A small team, which includes former entrepreneurs who have founded, built and sold their own start-ups, works on behalf of Ascension to uncover emerging disruptive technologies and companies focused on digital healthcare. The goal: find early stage innovators that have the possibility to disrupt the status quo and potential take equity positions.

Through collaborations with external start-up accelerators like Plug and Play in Silicon Valley, Ascension taps into emerging technologies and the players driving them. With the goal of innovating the quality, price, access, experience, and breadth of services offered by Ascension, the group explores opportunities resulting from disruptive trends like Block Chain, the Internet of Things and Artificial Intelligence to uncover the next big thing in digital healthcare.


2. Create parallel business models

Like all health system providers, Ascension is focused on delivering care to patients having served millions last year. Innovation for most healthcare providers includes new approaches to care delivery, processes efficiencies, and cost savings. But Ascension realizes that's a limited view, which is why it created the Ascension Solutions Division to help overcome the business model incrementalism and inertia that plagues many large companies.

As a wholly owned subsidiary organization, the Ascension Solutions Division is composed of a portfolio of companies designed to provide services back to Ascension. But here's the kicker: it also sells services to other health systems in the US and internationally. For example, the organization's TriMedx subsidiary is also an independent joint venture that provides clinical engineering services across the US and in India.


3. Innovate people to innovate the business

Like many organizations, Ascension recognizes that technology drives innovation. But Ascension also knows that underlying game changing innovations are people who find real problems to solve, define creative new business models, and take solutions to market. Ascension CEO Dr. Anthony Tersigni saw this often-underappreciated fact of innovation and created the Ascension Leadership Academy to build the organization's next generation of innovative leaders.

The unique architecture of the Leadership Academy provides a fully integrated platform for experiential learning, and offers much more than your typical corporate training program. Leadership Academy "communities" are composed of about 20 of Ascension's most promising executives who meet 7 times during the course of the 2½-year program for a week at a time in face-to-face sessions called "Residentials." Each Residential is designed to roughly follow the innovation process, giving participants hands-on experience with exploring trends, uncovering unmet customer needs, identifying and prioritizing opportunities, piloting ideas, and then pitching new business opportunities in a "Shark Tank" type format to an Innovation Council.

Tersigni - who personally attends every Residential as a show of commitment and support - lets everyone know of another significant possibility: that the most successful innovation pilot projects pitched at the end of the program may receive funding, which could result in the opportunity to leave one's current job to run and grow the new business. Last year, one pilot focused on creating "pricing transparency" for the healthcare industry received almost $1 million in seed funding to continue after the end of the program.


4. Fall in love with the problem, not the solution

It's easy to get excited by cool technology or let the fear of impending disruption drive ill-conceived decision-making. While innovation is clearly core to Ascension's strategy, the organization's focus on the customer - patients, families, and communities - guides its strategic focus, its investments, and its initiatives.

As a nonprofit, many of Ascension's efforts target new delivery models for the poorest and most vulnerable members of society in ways that build viable business models while advancing the quality of care. The Leadership Academy, for example, instills this value through giving participants immersive "voice of the customer" experiences within the communities it serves, along with design thinking tools for gaining insight into real-life problems to solve during the innovation pilot process.

5. Be your own Petri dish

Ascension's model for incubating new products and services using external technology follows best practices from firms like Intel, Google, P&G and others. The New Virtual Market Development & Incubations group also employs best practices from outside of the traditional healthcare industry by taking an "open innovation" approach to sourcing new technology and discovering strategic partners. Even more unique for a healthcare organization (or any company for that matter), the Leadership Academy is one of the first ever leadership development programs to formally serve as an internal incubator for new business opportunities.

The premise of Ascension's holistic approach lies in the organization's desire to build its capacity for navigating the dynamics of disruption itself. Ascension essentially "eats its own dog food" by doing things differently every day, rather than waiting for some external event - or the cumulation of events - to mandate some type of large scale urgent response.


The history of innovation reveals that "disruptors" typically come from outside the industry. Existing incumbents fight change and hold onto stale business models until it's too late. Just think Kodak and Blockbuster. The safe bet is the unsafe bet when it comes to disruptive innovation.

The secret sauce in today's inherently disruptive world - with healthcare being no exception - is proactive exploration and experimentation. Ascension's model includes a unique mix of external focus, internal incubation, and capability development. This trifecta essentially creates the context for smart risk-taking and is the foundation of a culture of innovation. This may also be the only real way to navigate - and drive - disruption.

Published on: Sep 18, 2017