Bringing Amazon-style Innovation To Health Care

by Darcy Lewis

July 17, 2017

The U.S. health care industry is experiencing change at a historic pace. Nonetheless, it’s difficult to harness these divergent changes to achieve innovation on a widespread scale. And yet that level of innovation is not only desirable, it’s essential. That’s the message Aaron Martin, executive vice president and chief digital officer at Providence St. Joseph Health in Seattle, shared with attendees at AHIP’s Institute and Expo in Austin.

Prior to moving to health care, Martin spent years creating change in the publishing industry at Amazon, where he was the North American director of Kindle and print-on-demand services. As such, he has a track record of creating meaningful, sustainable change on a large scale.

Martin offered a five-point blueprint for innovation that’s broadly applicable to health care organizations.

First, think big. “The U.S. health care industry as a whole would be the fifth largest economy on the planet, right behind Germany,” Martin said in an interview with AHIP. “Make sure the work that you’re proposing is going to matter in terms of moving the industry’s total economics.”

Second, innovate at the ends of the industry value chain: creators and consumers. “Any technology company targeting an industry for disruption believes there are fundamentally only two people who matter in a value chain, creators and consumers,” Martin said.

In Amazon’s value chain model for the publishing industry, authors are the creators and readers are the consumers. In between are publishers, distributors, and bookstores. Amazon significantly disrupted each of these in just a 10-year period. In health care, clinicians are the creators and patients are the consumers. Health systems, health insurance plans, and employers are the intermediaries.

According to Martin, outside innovators are always looking to add value or disrupt the people in between the creator and the consumer. “If we don’t disrupt our own business, somebody else will,” he said. “Health care is not immune and change may be even harder to detect [than in other sectors] because integrated delivery systems are composed of many smaller industries. Be aware that disruptors will only go after the most profitable segments and cream-skim them from incumbents.”

Third, focus only on things that matter to consumers and won’t change. For Amazon, the things that matter most to its customers are lower prices, broader choices, and more convenience. In health care, patients care most about lower costs, better outcomes, and a positive experience.

Observers tend to believe that Amazon excels at predicting the future, but that’s not where the company’s strength lies, said Martin: “They figured out what customer priorities won’t change and then focused only on them, so that everything they do addresses at least one of the customer’s core needs. That way, they don’t need to predict the future. We need to do the same in health care.”

Fourth, focus on the Five Ps of innovation. Martin based these on Aaron Dignan’s article “The Operating Model that is Eating the World.” Here is how Martin applies them to health care:

  • Purpose – Think bigger. “You always need a mission beyond your commercial agenda because you’re asking people to do really hard things. We’ve got that covered in health care.”
  • People – Hire and develop the best. “All the large tech companies put a premium on this.”
  • Process – Experiment, scale, and repeat. “We need a new way of building things in health care so that risk is spread throughout the development process instead of concentrated at the end when the project is delivered as it is now.”
  • Product – The ideal product is built to evolve quickly. Martin compared a BMW, whose features are static throughout the purchaser’s ownership, to a Tesla, which receives dynamic updates throughout the ownership cycle.
  • Platform – Other companies can build their products on your platform. “You want others to innovate on the platform you’ve built so you won’t have to constantly out-innovate the market.”

Fifth, be what Jeff Bezos calls a “Day 1” company. This analogy is drawn from Bezos’s 2016 Amazon shareholder’s letter, which Martin describes as a treatise on leadership. “Being a Day 1 company means approaching every day as if the company has just launched, it’s your first day on the job, etc.,” he said. “This is a hard discipline but it makes sure you don’t get trapped in your own success.”

Bezos believes “Day 2” companies make high-quality decisions but make them slowly. “In health care, we tend to wait too long for consensus,” Martin said. “If you’ve got as much information as you need and the decision is not irreversible, commit even without 100 percent data or consensus.”

This is the first in a two-part series.