Reinventing healthcare: the business perspective

With unprecedented disruption to access and delivery of healthcare, medical businesses are vulnerable to the requirement for rapid change; but there will also be opportunities to consider, improve, and transform business models.

Innovation and uptake of technology in healthcare has lagged almost all other industries – driven in part by practitioner risk aversion and historical caution, regulatory protection diluting urgency, fragmentation of the specialist landscape, litigation risk, privacy concerns, or implementation challenges. Rational fear has impeded growth and change; but downward pressure, driven by government, insurers, regulators, clinicians, and patients will influence a more rapid innovation cycle. 

There may not have been a compelling need for the healthcare sector to change the way that technology and innovation influences patient experience until very recently, but the horizon is shifting quickly. 

So, what does the future of medical business look like? How will business owners orient and navigate the shifting landscape? How can specialists harness their specific knowledge to the potential for real change; innovating, improving outcomes and the experience for patients, protecting their income, and giving back to the profession in terms of legacy, while building and protecting business value?

The challenge

While other sectors have been impacted by the disruption of digital newcomers, momentum in healthcare has been necessarily more cautious; but the pace is quickening. Medical businesses will not be the same in ten years as they are now, and there are opportunities to innovate, especially when considering the purpose, structure, and delivery of services.

The challenges that medical businesses face when considering innovation centre around a core of evidence – with burden of proof in efficacy, safety, and patient benefit. With anchoring imperatives such as these, innovation is slowed, as experiments cannot be conducted in ways that increase risk for patients, practitioners, or the industry. There is a significantly lower threshold for failure in medicine than in other industries, coupled to historically generous profits. Consequently, catalyst for change has been lacking.

Given the size and scale of the healthcare system, change becomes complex, expensive, and absorbs time; and while other industries innovate in increments, iteration in healthcare carries unacceptable risk. The unifying challenges in healthcare innovation centre around access and funding, but specific elements contributing to the challenge of innovation in healthcare include:

• Risk; emerging technology and techniques lack evidence and security
• Awareness; specialists tend to work in trusted professional networks, wary of new vendors
• Industry fragmentation; across disciplines, there is limited collaboration. Domain expertise reigns
• Propagation of learning in silos; innovation is emerging in pockets, but is not cascading across the industry
• Business model adaptation; rapid innovation challenges existing frameworks

We published our Perspective on Health, a report that outlines frameworks, stories, and expert views, which may assist you when considering the momentum of change in your business, which you can access here.

Why innovate?

Historically, there has been a trade-off required; being asked to choose two of speed, quality, and cost. However, technology is dismantling the ingrained belief of a trade-off between access, affordability and effectiveness, overcoming the balance of conflicting imperatives. Tempering risk management with a desire to innovate and improve will accelerate discovery process, across spectrums of efficiency, risk, and perception.

For patients, the desire for innovation is real. Where they’ve trusted technology to augment their experience in other areas of their life, it has been lacking in healthcare, with the burden of limitations in innovation carried by the patients and their caregivers. There is agitation for change amongst this group, and almost certainly, a business that innovates around patient need will benefit from advocacy, referral and loyalty. 

Change is coming – either from within industry, from patients, or via disruption by non-medical players entering healthcare. These newer players are well-resourced, and experienced, with drive to empower patients with greater information, interaction, independence, education, and choice, and have much to gain from challenging the traditional dominance of incumbents.

The perspective for medical businesses

Innovation will change the way doctors work; but aligning business strategy to opportunity and preparedness will simplify the transformation. When harnessed to patient needs and technology, medical innovation has the potential for radical, positive change. Medical specialists always focus on patients and their wellbeing during consultation and procedure.

For those entering the medical workforce, the consequences of ignoring innovation could be that their current behaviour may not fit future needs.

Commercialising innovation is challenging, but being clear on strategy, and the role for innovation, will deliver better patient and business outcomes. Applying frameworks for innovation will allow scope, flexibility, adaptation, and resilience, which can build enduring business value, making it more valuable now, as well as be more attractive for sale or merge in the future.

Read more, in our Perspective on Health, here.

What next?

Macquarie’s healthcare banking specialists can help you meet your goals. 

It can be challenging to run a business. If you’re considering what’s next, talk with us. We may help you get to where you want to be, sooner. We can provide finance solutions to help you build, grow, or innovate your practice, and take the time to understand your business. Together, we can help you find ways to grow and prosper, including specialist cashflow loans, which may be used for asset and/or income accretive purchases.

The Macquarie Healthcare team is here to help. To learn more, contact your Macquarie Relationship Manager, call 1800 442 370, or visit www.macquarie.com/health.