- Rainer Herzog
Disruption in Healthcare – What will be the new normal?
Allow me to raise this question: what will happen to a pharma company’s diabetes, respiratory or cardiology drugs if in 10 years time, we are able to fully use 3D organ printing?
Well, it would most likely disrupt its traditional business models of selling drugs for those diseases, wouldn’t it?
It seems that there is hardly any event, article or discussion on healthcare that is not loaded with the term disruption, or in its milder version, transformation. Yet, the true consequences for all healthcare stakeholders are often the elephant in the room. Many incumbents seem to still believe (or at least hope) that disruption is all about technology or digital innovation, and that it will stop there and not touch the very essence of their businesses or roles within the healthcare system.
Indeed, there is a very strong chance that they are dramatically wrong.
It is perfectly alright to be skeptical. We have been talking about disruption and transformation in healthcare for a very long time and in many places and markets, nothing seems to have substantially changed. If we take Germany as an example, the country still spends around 35% of total healthcare expenditures on hospitals, 17% on drugs and about the same amount on doctors. Guess how the distribution of expenditures was 15 years ago: yes, it was almost exactly the same (with slightly higher expenditures on drugs then).
If we look at disruption as being innovations transforming markets or sectors and improve simplicity, convenience, accessibility and affordability, we need to come to the conclusion that in many places, there is still a long way to go.
So why should healthcare stakeholders bother? What is different this time?
I think that there is one element in the healthcare arena that has the potential to fundamentally change the whole scenery: the shifting expectations of citizens, patients and doctors. This is often referred to as the “Amazon-Effect” and leads to a situation where individuals in the healthcare system are no longer willing to accept receiving care in silos that do not communicate with each other, being thrown into an anonymous hospital machinery that does not care about their wants and needs, or being obliged to tediously decipher their medical data (if at all they get a hold of them). Doctors will be increasingly reluctant to push heaps of paper through hospital corridors and not having instant access to patients’ health status, diagnostics or medication.
Digitalization in healthcare is about managing the changing expectations of citizens, patients, and medical professionals
CDO’s of healthcare related organizations and enterprises should move away from trying to apply digital technology, solutions and services to their traditional ways of operating. They might miss the point, as their existing business- and operational models could vanish in the not-so-far future. And the strongest driver behind all of this are the consumers – and to an increasing extent – the providers of healthcare. Simply because the established ways of working and the provision of healthcare services are not serving peoples’ wants and needs anymore.
The emergence of a mix of a game-changing dynamics
Apart from shifting expectations, there are other drivers and catalysts that will strongly contribute to disrupting the healthcare system as we know it. The new thing about this is, that all of it is happening at the same time:
Regulatory changes: in many countries legislation is finally adapted to provide a solid regulatory base for digital solutions and services to be used and to foster. The same is true for the usage of aggregated health data and respective AI-based innovations. Even in slow-moving countries such as Germany, such legislative changes are currently being launched.
New reimbursement rules: apart from a reliable legal basis, innovation leading to disruption needs a second prerequisite to flourish, namely a scalable business perspective. With the introduction of favorable reimbursements for e.g. digital solutions and services, this is by now well under way in many countries.
Changing social norms: citizens do not look to doctors as the single source of knowledge anymore. Whereas in previous generations, individuals willingly accepted to be sheep-like recipients of healthcare services, nowadays, they have grown into critical and confident healthcare customers.
Genomics-based therapies and reproduction technologies: in areas such as oncology, we start to better understand the role of genetic dispositions in the proliferation of cancer. This allows for a much more targeted therapeutic approach. These new therapy approaches will gain a foothold in more and more disease areas, as well as in diagnostics or prevention. Moreover, new reproduction technologies such as 3D organ printing will significantly alter and improve current therapies.
How to ride the disruption wave in healthcare – start developing your future game plan
One could for sure get lost amidst the plethora of articles, papers and events on the subject. Do not put the cart before the horse and let yourself be drawn into a premature technology discussion.
First of all, start by developing scenarios on how the world could look like for your organization or your markets and address questions such as: what are your customers’ expectations, what are the relevant technological innovations, will there be new players in your market space, how does this affect your organization, your people and your future role in the system? Developing the future game plan should be the starting point of your disruption ride.
It is only afterwards that you should start to think about how e.g. digital technology can support you in achieving the often needed organizational transformation, your future operations and your wanted position.
And bear in mind: disruption is by nature not linear. Especially in healthcare, it will rather happen on a market-by-market basis instead of on a national level. And in most cases it will unfold itself in certain fields or pockets across the healthcare system and not invade the system as a whole right from the beginning.
Finally, how long will this take to unfold? Well, how long did it take to replace horse-drawn carriages with cars: about 8-10 years?
I think this is a fair estimation.
