The year 2016 is one of the biggest ones yet for the health care technology space, according to a study by referralMD. The study found that innovation thrives in health care because companies are increasingly pushing for necessary advancements in medical devices, software and IT.
The impressive growth of technology spending in health care is here to stay. The North American health care IT market is expected to reach $104.3 billion by 2020. As the industry invests more in innovation centers and projects, health care companies will begin to resemble tech giants such as Amazon and Apple. Why?
Four significant factors are forcing health care to move faster and innovate quickly.
The urgent need for innovation in health care
Federal regulations call for it.
Many of the health care technology advancements in 2016 are driven by government regulations. “A majority of [the health care IT market] is attributed to the growing adoption of various health care IT solutions by health care providers,” explains market research firm Markets and Markets, “in order to meet the heightened regulatory requirements for patient care and safety.”
For instance, the Affordable Care Act (ACA) called for new care delivery and payment models. Under the law, health care professionals aren’t paid for the quantity of care they provide, but for quality. With the ACA’s broad implications, and the move from volume to valued-based care, hospital leaders now aim to reduce costs and increase quality care—two things which a new focus on innovation can help deliver.
Empowered patients demand it.
Until recently, health care has been considered a tech laggard, resulting to treatment that were “inefficient, ineffective, and consumer unfriendly.” Even before the ACA forced the industry to evolve, a few leaders recognized that they had to adapt to meet their customer’s changing needs.
“Patients are no longer passive receivers of a diagnosis,” says Bill Bunting, director of health care solutions at EMC. “They are consumers and active participants in their own care. They demand access to their personal health information wherever they are. They want the ability to quickly and securely share their health records with other providers.”
“Patients are no longer passive receivers of a diagnosis.”
With new technologies empowering patients, several established health care companies and startups have attempted to become the ‘Uber’ or ‘Airbnb’ of the industry. They are pushing digital transformation efforts to build apps and platforms that enable on-demand access to health care. Advancements in technology have increased expectations across all industries—health care needs to keep up with tech-savvy patients.
Fierce competition requires it.
Patients have more information and options at their fingertips. They won’t hesitate to switch health care providers if they can get better service elsewhere.
A 2016 Accenture study shows that if service is poor, patients are just as likely to switch health care providers as they are to abandon hotels. Sixty-one percent of patients say they will switch if they can’t get an appointment quickly when they need it. Customer service experience and patient loyalty are correlated.
The erosion of patient loyalty has huge financial implications. Millennials, for instance, are used to convenience and preventative care. They also rely heavily on Google and social media for health care information, while demanding better service from clinics and centers. In the future, Millennials will give their business to those organizations that can meet their needs for convenience and better care.
Industry leaders are beginning to see that innovation is immediately necessary to improve service.
Long-term success depends on it.
“Patients, payers and politicians are demanding [innovation],” writes Dr. Paul E. Plsek, an independent management consultant and author of Accelerating Health Care Transformation with Lean and Innovation: The Virginia Mason Experience. “History shows that organizations that fail to deliver it will suffer.”
Innovative companies from all industries tend to outperform the market—by a lot. One study shows that innovators from all industries enjoyed median profit margin growth of 3.4 percent year-over-year since 1995, compared with 0.4 percent for the median S&P Global 1200 company.
The survival of health care organizations hinges on the ability to remain relevant. This is why innovation in product and service development and customer experience is so important.
Patient-centered innovation is key
Across every industry, companies are racing to drive customer-centric innovation. Failure to innovate will result in a failure to thrive.
The tech race has just begun, with some organizations starting to experiment with emerging technologies like virtual reality. In this era of value-based care, ongoing patient engagement is key to creating products, services and experiences that are relevant to patients. As health care adopts tech’s fail-fast-and-fail-quickly mantra, the companies that invest in patient-centric operations are positioned to lead the industry.