Healthcare Needs Real Entrepreneurs Before It Can Have Real Innovation

5/17/11Follow @venturevalkyrie

Earlier this week I had the pleasure of attending an event put together by the Agency for Healthcare Research and Quality, a branch of the US Department Of Health and Human Services whose mission is to improve the quality, safety, efficiency, and effectiveness of health care for all Americans. AHRQ has established an Innovation Exchange designed to speed the implementation of new and better ways of delivering health care. This particular event was called “Scale Up and Spread” and was designed to let several of the innovations brought to light through the Innovation Exchange be reviewed by a panel of industry people, Shark Tank style.

If you have seen the show Shark Tank, which I wrote about recently, you can appreciate that they called this a “Fish Tank” event, as the goal was for the panel to provide pointed feedback to the “innovators” but in a constructive and less confrontational manner than you might find in the TV show. Not a shark fin in sight, unless you count the one I had to hide with my cardigan since I was the only private equity investor in the room. Talk about a fish out of water! All of the approximately 50 or so attendees represented non-profit organizations, consumer groups, government agencies, teaching hospitals and related consultants.

It was a very interesting day for many reasons, not the least of which was the stark contrast in orientations between the presenting innovators and the panel of evaluators. Each of the three presenters stated, in one form or another, that their primary motivation for bringing forward their idea and desiring to scale it was, for all intents and purposes, to better mankind. Altruism was the common driving principle that brought them to that time and place, not the desire to get famous or rich. It is such a starkly different perspective than the one I usually interact with in my day-to-day role as a very for-profit investor. My working definition of altruism is hoping that my partners make money too. To be fair, any one whose private equity career led them to health care instead of Internet gaming must have at least a whiff of a desire to make a meaningful contribution to the world beyond just making money. We do what we can to keep that under wraps for fear our tech-focused peers would laugh and point.

To kick off the AHRQ innovation event, AHRQ Director Dr. Carolyn Clancy gave an excellent speech in which she said that she had been thinking about the sweet spot between research, on the one hand, and replicable innovation which can be scaled on the other. Dr. Clancy noted that many of the more than 600 (!) ideas that have been brought forward through the Innovation Exchange sit on one side of that sweet spot and are trying to break on through to the other. Among the things she said in her remarks was, “I’m not native to that innovation culture.”

This comment really got me thinking. I know what she meant, or at least what I think she meant: as a physician, academician and policy person, she does not come from a work environment which typically focuses on consciously rewarding and nurturing innovation and its widespread dissemination. Not that great innovations can’t and don’t emerge from those worlds (that’s exactly what the AHRQ Innovation Exchange is working to do), but scaling and spreading innovation on a large scale has more traditionally been considered the purview of the business community.

In some ways, though, I am worried that the focus on the term “innovation” is getting a little overdone. Innovation is a wonderful thing, but the term is becoming so common it risks becoming a cliche.  Legions of people are now claiming that their passports were issued by the Innovation Nation, but the arrival of true healthcare innovations that really move the cost or quality needle are fewer and farther between than the discourse suggests.

Innovation as a concept has become so fashionable that even organizations that don’t seem inherently tuned to innovate feel like they have to start innovation initiatives. A case in point: nearly every major US healthcare corporation seems to have a newly-minted Innovation Center presided over by a Chief Innovation Officer or equivalent. I realize that there is much change afoot in the healthcare industry, but weren’t these organizations trying to innovate all along? Does innovation need it’s own department, it’s own center, it’s own association to be real?

Don’t get me wrong, there are some seriously smart, seriously innovative people in these innovation roles and there is no doubt that innovation is necessary to respond to the challenges of our current healthcare system—the same old thing isn’t going to cut it. In some ways the amplified focus on innovation is a plus because it means that an abundance of resources are being poured into activities that foster new ideas, such as the efforts put forth by AHRQ. On the other hand, I fear that if there are armies of people out there beating the bushes for innovation, they will be forced to find it at any cost to perpetuate the need for their services. That can lead to a kind of over-breeding of ideas that are innovative but not actionable. Not every new idea is an innovation worth fostering, just watch Shark Tank—Man Candle anyone? It seems to me that the pursuit of “innovation” just isn’t specific enough.

This brings me full circle to my AHRQ meeting experience. While all three of the featured innovators had interesting if nascent ideas for how to improve a discrete part of the healthcare delivery system, none of them articulated a goal for their idea or viewed themselves as entrepreneurs charged with driving the idea to infinity and beyond. As I said in the meeting: your goal can be to sell five widgets or world domination, but you have to have a vision of where you’re headed if you are going to get there. And yet, in three out of three cases, each idea was described alongside the somewhat impressive results of its limited application, but none of the innovators could articulate where they wanted their idea to go or what would constitute evidence of success.

Interestingly, each of the innovators shied away from anything that was suggestive of a marketing plan, each stating in their own way that the idea of actively promoting their innovation made them uncomfortable. None of the innovators described a vision of how big the market for their idea might be or the potential financial opportunity it afforded. Two of them had trouble articulating the best way to demonstrate to customers that their ideas delivered results worth paying for.

These oversights made me think that the current innovation craze sweeping the healthcare world might better be redefined as a quest for entrepreneurship or a quest to actively transform innovators into entrepreneurs. Innovation itself is easy to come by, but innovation guided by a goal—such as reducing unnecessary readmissions for people with congestive heart failure or eliminating accidental medication errors in hospitals or ensuring that all breast cancers are identified in their early treatable stage—can lead to great products and services that can make a real, measurable difference for humanity, reduce healthcare costs and make money for innovators and investors alike. When combined with a great entrepreneur who knows how to marry the innovation with a goal-driven set of strategies, it becomes possible to conquer the marketplace and build businesses (or programs in the case of government agencies or non-profits) that can dominate their fields.

Yes, it’s true—great companies are sometimes born by accident when an innovation is, in and of itself, so big that it can make its own way; however, that is the rarest of exceptions. Without great leadership executing towards a definable goal, even the most innovative ideas are likely to die on the vine. As many have said, a good idea with a great leader beats a great idea with a good leader any day of the week. Innovation is only as great as the vision and skills of the entrepreneur who drives it forward, spurred onward by the target toward which she is driving.

When these things come together, amazing things can happen. And for those charged with scouting for this magic innovation cocktail, how will they know they have found it?  It will be evident from the trail of shark fins following in its wake.

Lisa Suennen is an independent consultant, board member of AngioScore, and a former managing member of the Psilos Group, as well as the co-author of Tech Tonics: Can Passionate Entrepreneurs Heal Healthcare With Technology? and author of the blog Venture Valkyrie. Follow @venturevalkyrie

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