Fresh Paint #11 Epic as a 'Control Point' in Healthcare; Scene at HLTH; General Catalyst is Killing Monovation; Decoupling from China
A collection of commentary, insight and perspective published in November.
Fresh Paint is the Blue Spoon Consulting blog devoted to breaking the relentless momentum of the status quo. The era of linear solutioning is over. Any leader who thinks their business (or government) is going to be successful with the Standard Model of thought and inaction is unlikely to last long.
Outcomes happen at a system level. The locus for a modern strategy should be the same.
‘Strategies for Displacement’
Is Epic’s dominance good for healthcare?
The question is the headline to an article last week by Giles Bruce for Becker’s Healthcare; they asked a handful of hospital CIOs how they feel about Epic as a 'control point' in a $4 trillion market. Epic is the biggest name in health IT and, by all accounts, only getting bigger.
The EHR vendor controls nearly a third of the U.S. hospital market share and continues to add large health systems to its portfolio. But is the Verona, Wis.-based company's reign a positive or negative for healthcare? Becker's asked hospital and health system CIOs how they feel about Epic's command of the business.
Keith Perry, senior vice president and CIO of Roanoke, Va.-based Carilion Clinic:
"Anytime you have limited competition around a product or service, you’re going to see the potential for higher costs associated with it," he said. "In general, competition helps to keep prices in check. Given the limited competition in the EHR space, I think you’re going to see continuing upward movement in cost structures for acquiring and maintaining EHR technology."
Healthcare is one of the largest, most lucrative and hellishly complex businesses in the United States. Many with deep pockets and expert knowledge have attempted to "fix" it; none have been successful. Part of the reason why is the gap in developing new leadership and management skills in designing 'strategies for displacement' -- intentionally creating or degrading power and control.
Writing in Forbes recently, Katie Jennings captures the nut of the problem:
"Hospital executives are often more committed to Epic than most Americans are to their marriages. Epic’s average customer has been using its software for ten years, and Faulkner claims the company has never lost an in-patient hospital client. Partly that’s because it’s so hard to leave."
Epic writes the code to sustain its own flywheel.
Source: Forbes
Scene at HLTH
Seen/Scene @ HLTH’s #HLTH2022: fan·ta·sy /ˈfan(t)əsē/ noun -- the faculty or activity of imagining things, especially things that are impossible or improbable. "the notion of an Amazon-like consumer experience as the reference model for digital health is fantasy”
General Catalyst is Killing Monovation
"Ecosystems" aren't 'out there' already so much as they are intentionally designed with system vision. The process starts by killing the idea of ‘monovation’ — depending on a single source of innovation — as the jumping-off point for new growth.
This has two implications.
The first is the importance of building collaboration that spans industry environments, engages in the boldest forms of connection making, and unifies multiple stakeholders. The second is the importance of shaping developments proactively with systems theory as a compass. Ecosystems create ‘space for computability’ — this is where the endless ladder of opportunity becomes central to strategic thinking, the place that turns the conversation about technology on its head by viewing technology as a natural system, an extension of biological evolution (for more on this idea, “What Technology Wants” by Kevin Kelly is a good start).
And this is where the big technology and big data players want/need to go for growth and market innovation, to move up the value chain and increase their relevance to clients (look no further than “Indian Big Tech’s affair with consulting: Will TCS, Wipro and the likes strike gold this time?” published last week in the Economic Times).
The first stage of an ecosystem-centered market strategy is "ecosystem genesis” — Here is where the basic architecture of a new economic system is worked out. Novel linkages between keystone components are made. The goal is to establish the basic capabilities to create new value. And as an investment thesis, General Catalyst understands this process better than most.
To wit:
"General Catalyst, a San Francisco-based venture capital firm, announced Tuesday it’s partnering with 10 health systems to create a digital health ecosystem.
General Catalyst will serve as a “think tank” to these 15 organizations and give them access to companies within its expansive digital health portfolio. Once each organization works directly with General Catalyst, the 15 systems will create an ecosystem and learn from each other, said UHS CEO Marc Miller."
Like Miller, Dr. David Lubarsky, CEO of UC Davis Health, said he was impressed by Taneja’s vision on health assurance and creating an integrated ecosystem.
“We believe they have the right philosophy as a partner,” Lubarsky said. “We already use several of their applications. There is probably some information where we can collaborate and co-develop future applications, so they serve not only the basic needs of an organization but an organization as complex as ours.”
The goal from General Catalyst’s perspective is to bring disruption to those health systems, Taneja said in a previous interview. He said that health systems must disrupt their own business model and work together to achieve the goals of health assurance, which include improving preventative care, reducing costs and boosting access.
General Catalyst closed a $670 million fund focused on health assurance in August.
More simply:
If the objective is disruption, the system comes first.
Source: Modern Healthcare
Strategic Adjustment for China Decoupling
The strategic adjustment Western pharmaceutical companies will need to make is in their understanding of China as a place to invest for growth.
"Companies that have put too many eggs in the China basket will be forced into a painful and costly reorientation," writes Diana Choyleva, chief economist at Enodo Economics. "If they have too much manufacturing in China, they will need to reallocate; if they are too dependent on the Chinese consumer, they’ll need to brace for very slow growth for the foreseeable future.
People talk about “reading the tea leaves” on China, but the results of the 20th party congress in Beijing this month were clear to anyone: Xi Jinping made a clean sweep, putting his men in the top party positions. He now has a clear field to pursue his preferred policies, and those policies are unlikely to be investor-friendly. Markets have taken the outcome of the Congress badly. Investors must now reposition for a China where Xi Jinping’s credo reigns supreme. They must also brace for the expected backlash from the US, in the form of more sanctions and increased scrutiny of supply chains and investment ties that were once encouraged, a mere decade ago.
What lies ahead is nothing short of a fundamental rewiring of how the world works."
Indeed.
Source: Financial Times
Market Innovation via Market Integration
The great "unbundling" in this image is part of The Problem.
Fragmentation in healthcare is getting worse, not better. It's a jungle in fast-forward motion, a tornado of technical potential and possibility with low barriers to entry, a 'thousand points of light' chasing revenue from a $4 trillion health economy in which every ICD-10 code is marketspace.
The scarcity in healthcare (+ life sciences) is not in the supply of solutions, but in their aggregation. In a world of ever-increasing abundance and hyper-commoditization, it is novel combinations that matter most.
To that end, the best way to spark new growth and market innovation is through market integration: combine pieces and parts such that you have a system advantage, a storyline of value told through outcomes, not technical inputs.
Because despite all the 'expert knowledge' and new drugs and technologies currently available, diabetes is still expected to increase by 54 percent by 2030; annual deaths attributed to diabetes will climb by 38 percent; and total annual medical and societal costs related to diabetes will increase 53 percent to more than $622 billion.
When it comes to "fixing" healthcare with creative leadership, start with 'market interoperability' first, and data interoperability second.
Source: CBI Insights
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