Healthcare Organizations (Including Device Manufacturers, Payers, and Providers) Can Help Track R&D Efforts and Patient Information, Schedule Payments and Services, Launch New Care Options, and More Commonly turn on the light.
But the digitization of products and processes has dramatically changed the game for everyone. Consumer expectations for healthcare services are increasingly influenced by their experience with large, digitallyborn companies. With this “customer experience” in mind, healthcare companies are looking to improve their services by integrating the latest technologies into their existing business models and IT architectures. At the same time, they must contend with new and non-traditional market entrants (such as IBM and Microsoft) as well as pervasive regulatory and risk concerns
More and more healthcare companies around the world are realizing that they need to manage digital technology as a strategic asset rather than a tool. Some seek to bridge the gap between legacy and digital IT by transforming complex systems. Leading healthcare technology companies are experimenting with how to use analytics to securely transform collected data into useful business insights while maintaining their existing IT architecture. Similarly, a large pharmaceutical company is considering using a cloud platform to reduce data storage and processing costs and speed up R&D efforts.
However, most pharmaceutical and medical device companies are lagging behind in digitization compared to companies in travel, retail, telecommunications, and other industries (Figure 1). Their digital transformation efforts can fail for many of the same reasons that hinder such efforts in other sectors. For example, a limited understanding of the specific ways in which business value is created by implementing new technologies across complex products and service lines, and a lack of nativeness. Inadequate focus on digital issues by digital talent and senior management.
Exhibit 1
Pharmaceutical and medical device companies lag behind other industries in their digitization efforts.
Our experience with companies inside and outside the healthcare ecosystem suggests there are four core principles for succeeding with this kind of all-encompassing change program. Healthcare companies first need to identify and prioritize their critical sources of value; they need to identify the products and services they provide that lead to competitive differentiation and that would benefit most from digitization. Second, they must build their service-delivery capabilities—not just in physically integrating and managing new digital technologies but also in implementing new approaches to product development and distribution (for instance, agile and DevOps methodologies). Third, healthcare companies should look for ways to modernize their IT foundations, for example upgrading pools of talent and expertise in the IT organization, moving to digital platforms such as cloud servers and software-as-a-service products, managing data as a strategic asset, and improving security protocols for the company’s most vital assets. And fourth, companies must ensure that they build and maintain core management competencies. In short, all the enablers that enable you to pursue a successful digital agenda.
This article discusses the changing healthcare landscape, the new possibilities of digitization, and the four fundamental principles healthcare companies should follow to successfully complete their digital transformation. Like digital leaders in other industries, digital healthcare pioneers have a huge opportunity to not only win in their desired market, but change the rules of the game.
Understanding the Changing Landscape in Health Industry
Healthcare companies around the world face a different competitive landscape than they did more than a decade ago. Delivery Mechanisms, Back Office – Operations and Supplier Relationships of Key Industry Players.
In fact, never before have so many technologies with the potential to impact the healthcare industry mature so quickly and in volume. Next-generation genomics; big data and advanced analytics; machine learning and automation programs; connected, sensor-enabled devices and wearables; 3-D printing; and robotics—all have the potential to fundamentally change the way healthcare companies develop products and provide services. Consumers are more informed about and more engaged in healthcare decisions because of technology, and regulators and policy makers are advocating for the development of open data and technology standards as well as knowledge-sharing initiatives among companies in the industry.
As a result, some of today’s healthcare companies are focused on using technology to improve their interactions with patients and ecosystem partners, rein in costs, streamline operations, and better manage changing industry regulations. They’re acknowledging the shift toward evidence-based medicine and exploring ways to use big data to customize care programs and make the case for investment in and reimbursement for emerging devices or treatments. A good example of digital reinvention in healthcare is the life sciences giant Johnson & Johnson: the company has undertaken a massive digital transformation of its IT organization, moving a bulk of its processing workload to a hybrid cloud environment and incorporating data lakes, data analytics, and agile development practices into its operations. As a result, the company has been able to bring together diverse business skills – design thinking, deep clinical knowledge, and a global understanding of healthcare systems – to create new patient-centric products.
Moving from a healthcare company to a digital enterprise opens up many new ‘battlefield’ opportunities for industry players. These include:
Establish direct consumer relationships to influence patient outcomes, rather than through institutional intermediaries. For example, one service provider links disparate data sources so that clinicians can more easily analyze personal, clinical, demographic, genomic and environmental information to treat chronic conditions such as asthma and multiple sclerosis. We have made it possible to determine personalized interventions that are appropriate for patients with disease.
Find new sources of value in various profit pools. For example, some healthcare companies, especially new entrants from the technology sector, are looking for ways to provide care outside of the traditional hospital setting. Instead, we are developing ways to provide digital diagnostic services, remote health monitoring, and home care.
Collaboration to develop complementary skills. Vendors and device makers are increasingly partnering with others in the healthcare ecosystem, including high-tech entrants. The latter are masters of consumer marketing, but in general they are relatively new to the medical regulatory process. Healthcare companies can help fill this knowledge gap.
Contribution to fast-growing industry standards and practices. Healthcare companies at all levels of the service chain have an opportunity to define new rules for engagement. For example, we can work with governments to develop standards for open access to patient information and medical records, thereby democratizing healthcare.
Success through Digital Transformation
Healthcare is becoming increasingly distributed and complex. To adapt, organizations must adopt open systems that enable advanced analysis of multiple data streams and the development of customer-facing services. You should be able to view the process as an end-to-end flow rather than individual handoffs, take more risks (where appropriate), move faster, and engage in innovative partnerships. All of this is easier said than done for organizations plagued with decades-old legacy systems, processes, and operating models optimized for the steady-state world.
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Our experience shows that when healthcare companies focus on four key aspects of their and ways of working are more likely to be successful. Companies provide products and services, organizational IT architecture, people, finance, and governance processes (Figure 2). Let’s take a closer look at each.
Appendix 2
Digital transformation is more likely to be successful when companies focus on his four key aspects of their business.
Identify and Prioritize Sources of Value That Matter
As a first step towards digitization, healthcare companies need to and decide how to deploy it. These activities are possible. Businesses can then decide how to best align their digital technology investments and development approaches to meet their top priorities. It also helps get the (always scarce) executive attention in the right direction at the right time during a complex transformation process.
There are any number of value propositions that companies want to target. Much depends on the company’s position in the value chain. An obvious source of value for most healthcare companies is their ability to get closer to their customers, offer targeted products and services, and build value-based relationships. For example, some device makers may want to develop smart products such as sensor-enabled devices, inhalers, and auto-injectors that can monitor and manage certain conditions or support medical procedures. Pharmaceutical manufacturers can build digital platforms for collecting and analyzing medical data, conducting synthetic clinical trials, managing market access, and accelerating research efforts.
Some healthcare organizations may consider ways to reduce risk using previously isolated datasets. For example, improved access to healthcare cost metrics, patient outcomes, satisfaction metrics, and other metrics will enable manufacturers to develop new types of contracts and risk-sharing models with service providers. Consider that in a typical joint replacement surgery, the implant itself only makes up his 15% of the total treatment cost. Forward-thinking manufacturers and suppliers can use aggregated, shared data to collaborate on how to optimize the remaining 85% of costs.
And finally, some companies in the healthcare ecosystem may want to use automation, robotics, and Industry 4.0 technologies, such as sensor-based equipment and the Internet of Things, to break down walls between business units and functions, thereby speeding up processes and decision making and reducing administration costs.
Build service-delivery capabilities
Once priorities for digital transformation have been set, healthcare companies will need to focus on the means by which they will offer targeted digital products and services to consumers and stakeholders. In most cases, companies must understand user needs in a detailed way and reimagine their work flow and processes as end-to-end activities that can be automated, virtualized, and personalized employing real-time insights. For example, insights about the supply chain—say, the current levels of inventory compared with sales forecasts—could help healthcare companies reduce general and administrative costs and improve customer service. Agile development, data sciences, and customer-experience design can be useful approaches for these companies to explore.
Agile, a software development methodology, has been around for decades, but is undergoing a renaissance in the digital world. Agile development involves short and rapid stages of development, prototyping, re-evaluation, and customization. Taking a step in the agile direction involves changing organizational structures to be more product-centric, finding ways to improve interactions between business users and IT, redefining roles within business units and IT organizations, and improving budgets and planning. should be reconsidered. 1
Combine an agile development approach with data science and customer experience design skills to accelerate digital service delivery. Business, IT operations, and analytics professionals can work together to develop and deliver products and services in weeks instead of months or years. In fact, a large digital healthcare organization can have up to 100 agile teams working on projects in parallel at any given time. Of course, companies will need to make the business case for agile to senior management, in an outcomes-driven process. They will also need to think boldly; rather than tag certain projects as agile, senior leaders in business and IT at one large healthcare manufacturer started with a presumption that all new initiatives would be structured as agile projects, unless proved otherwise.
The results of combining agile operations with data science and customer-experience design can be significant. Some device makers are wrapping digital solutions around their products to create better patient outcomes—allowing for predictive diagnostics and early detection in patients with certain types of disease (atrial fibrillation, for instance), or the launch of fully digital surgical units, or remote monitoring of patient care. Meanwhile, some pharma companies are using advanced analytics to discover drugs or identify new uses for established ones.
IT Infrastructure Modernization
After identifying digital priorities and discussing digital delivery models, healthcare organizations need to review their IT infrastructure. Can it really support the necessary activities? Complex legacy technology systems are typically the biggest obstacles for healthcare companies looking to go digital. Older systems were typically set up like a patchwork. New applications and gateways are screwed onto existing ones. The result is spaghetti code and fragmentation, neither of which promotes speed and transparency in IT operations. To support strategic priorities and an agile development approach, the organization needs to modernize his IT infrastructure.
To manage all data holistically so that users can access records quickly and easily, you need to build a robust and reliable data backbone. Access should be governed by a unified framework and records should be coordinated based on business use cases. In this way, businesses can build a ‘true golden source’ of critical information about prices, products, customers, invoices and contracts.
Companies should also start incorporating connectivity into their IT architectures—for instance, using sensors and other monitoring technologies to generate and manage data collected from medical devices in the field. Some manufacturers have created internal platforms that let them analyze real-world treatment data to prove the efficacy, safety, and value of their offerings. Other device makers have been able to use data collected from devices implanted in patients to predict treatment outcomes or intervene earlier in certain types of cases.
Of course, companies will need rigorous cybersecurity policies and infrastructures to protect the most relevant pieces of information in the corporation. Leaders can take a series of steps to protect these “crown jewels”—including identifying and mapping digital assets (data, systems, and applications) across the business value chain; assessing risks for each asset, using surveys and executive workshops; identifying potential attackers, the availability of assets to users, and current controls in place; locating the weakest points of security around crown-jewel assets and identifying remedies; and, finally, creating a set of initiatives to address highest-priority risks and gaps in control.2
Strengthen core management capabilities
Any large transformation effort requires that companies strengthen and maintain their capabilities in several core areas. The first is talent and partnerships.
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