12 Innovation

Question 1

what are the 3 types of innovation in healthcare?

Answer 1

change the ways consumers buy and use healthcare

use technology to develop new products

generate new business models, particularly those that involve the horizontal/vertical integration of separate health care organizations or activities

Question 2

describe the consumer focused approach to innovation

Answer 2

innovations in the delivery of healthcare can result in more convenient, more-effective, and less-expensive treatments for today’s time-stressed and increasingly empowered healthcare consumers

patients are like consumers

they want both a good produce and ease of use

Question 3

what are the 6 forced affecting innovation?

Answer 3

industry players

funding

public policy

technology

customers

accountability

Question 4

describe the players of innovation

Answer 4

healthcare sector has many stakeholders - each with an agenda

often, these players have substantial resources and the power to influence public policy and opinion by attacking or helping the innovator
—- e.g. hospitals and doctors sometimes blame technology-driven product innovators for the healthcare system’s high costs

medical specialists wage turf warfare for control of patients services and insurers battle medical services and technology providers over which treatments and payments are acceptable

competing interests of the different groups aren’t always clear or permanent

unless innovators recognize and try to work with the complex interests of the different players, they will see their efforts hindered

Question 5

why is it difficult to find investments for healthcare innovation

Answer 5

one problem is the long investment time needed for new drugs or therapies that require FDA approval

while venture capitalists backing an IT start-up may be able to get their money out in two to three years, investors in a biotech firm have to wait ten years even to find out whether a product will be approved for use

another problem is that many traditional sources of capital aren’t familiar with the healthcare industry, so it’s difficult to find investors, let alone investors who can provide helpful guidance to the innovator

a frequent source of investor confusion is the healthcare sector’s complex system of payments, or reimbursements, which typically come not from the ultimate consumer but from a third party—the government or a private insurer
innovations need to appeal to doctors, who are in a position to recommend new products to patients, and doctors’ opinions differ

Question 6

what are the 2 financial challenges of innovation in healthcare

Answer 6

innovation in healthcare represents 2 kinds of financial challenges

1) funding the innovation’s development (slow returns!)

2) figuring out who will pay how much for the product or service it yields

Question 7

how does policy affect innovation?

Answer 7

government regulations of healthcare can sometimes aid innovation or hinder it
—- e.g. aids: “orphan drug” laws provide incentives to companies that develop treatments for rare diseases
—– hinders: recent legislation in the US placed a moratorium on the opening of new specialty hospitals that focus on certain surgical procedures

important for innovators to understand the extensive network of regulations that may affect a particular innovation and how and by whom those rules are enacted, modified, and applied
—- e.g. officials know they will be punished by the public and politicians more for underregulating (approving a harmful drug) than for tightening the approval process, even if doing so delays a useful innovation

Question 8

how does technology affect innovation?

Answer 8

as medical technology evolves, understanding how and when to adopt or invest in it is critically important

move too early, and the infrastructure needed to support the innovation may not yet be in place; wait too long, and the time to gain competitive advantage may have passed
—– e.g the polio vaccine eventually eliminated the need for drugs, devices, and services that had been used to treat the disease, just as kidney transplants have reduced the need for dialysis.

conversely, the discovery of an effective molecular diagnostic method for a disease such as Alzheimer’s would greatly enhance the demand for therapeutic drugs and devices.