Want to innovate? Look outside of health care
Health system models top companies nationwide
One of the reasons benchmarking is underutilized in health care, observers say, is that many hospitals and systems spend much of their time in search of ideally compatible facilities against which to compare themselves, often within their own systems or organizations.
In reality, these observers say, health care facilities should be broadening their benchmarking horizons, learning from anyone and everyone they can.
That’s precisely the approach that’s being taken by Memorial Hospital and Health System in South Bend, IN.
"We’re spending most of our time in the process of setting up an innovation center," reports Philip A. Newbold, MBA, CEO of Memorial.
"We’re going to teach all of our employees how to be more creative, more innovative, and to take every single thing we do and differentiate ourselves and make it a wow’ experience for our customers," he says.
Benchmarking outside health care
And where is Memorial learning how to do this? "We’ve been spending time going around the country and visiting with major companies: Whirlpool, Baxter, 3M, Medtronics, Steelcase, IDEO," Newbold reports.
"They’re more than willing to sit down and to share how they became innovative — how they develop new products, new services, and how they invent their services," he adds.
There are a number of reasons for benchmarking innovation outside of health care, Newbold says.
"For one thing, innovation has been absolutely red hot in the last 10 years in almost every industry but health care," he says.
"It’s all these companies are talking about: Where are the brightest, most creative people, how can we get them in here, and how can we create conditions that produce new thinking?’ We simply have no hospitals outside of teaching hospitals that even have an R&D [research and development] function," Newbold continues.
Why is that? "We just haven’t had the national scale you have when you put a Motorola or a 3M or a Johnson & Johnson together," he notes.
"They have huge budgets and are more consumer-oriented. We are operating in a wholesale model and largely deal with a few dozen payers," he points out. "But we have to develop this core competency to ensure higher revenues for the future, and to become more attractive by differentiating ourselves in the market."
In addition, Newbold notes, benchmarking outside of your own bailiwick is the hottest topic in industry today.
"That’s why you see product development groups bringing in anthropologists, people who are trained observers of consumer behavior, for added insight," he explains. "All those different disciplines are what we in health care will need to be a real value-added experience — to give our customers that fabulous experience — and that won’t happen by talking to ourselves."
Newbold now is looking to set up an organization of seven to 10 premier hospital centers around the country to be beta sites to test innovations.
"This organization is going to provide something similar to what Microsoft has to test its new products," he explains.
Such partnering is imperative, he adds, because these new relationships might involve licensing negotiations, equity participation, and so forth. "We don’t have people in our organizations that are familiar with these things," Newbold observes.
Missed opportunities
Arrangements like these can help health care facilities reap new revenues that currently are going to entrepreneurs and other nontraditional health care players, Newbold says.
"There are opportunities to set up new companies with new revenue streams, by hooking up with venture capitalists and other folks," he posits.
"Take the example of LASIK surgery; none of that was initiated by hospitals. We don’t come close to realizing our potential. Nobody buys their pharmaceuticals from hospitals; they buy them from chain drug stores. All the money goes to entrepreneurs who are competing with us."
Through the innovation center, Newbold says he hopes to develop new technologies and services "so we can get some of that money."
Newbold says he plans to model his center after the one developed by The Studer Group in Pensacola, FL.
"Quint Studer has set up a customer-service training company that is the premier company when it comes to hospital customer service," he says.
"They can demonstrate how to move patient satisfaction scores to any level you want. Our model may be close to something like that," Newbold says.
Initial discussions about the innovation center began about 18 months ago. Currently, Newbold is seeking partners to create training manuals and courses of study for his 3,200 employees.
Such efforts could transform health care
Newbold says efforts like his have the potential to transform the health care industry.
"I would think one of the outcomes would be a remarkable differentiation from one hospital to another; patients will choose a specific hospital because of their previous experience," he says.
"There will also be the potential for new revenue generation from existing product lines as well as new sources of product revenue," Newbold adds. "And we will do much better in the war for talent if we have entrepreneurial organizations with lots of creativity.
"In fact, there are studies that show nurses want to work in an atmosphere like that, so one of the additional outcomes will be an added weapon that can really help fight the nursing shortage," he concludes.
Key Points
- Innovation center will teach employees to be more creative, differentiate facility.
- Other companies are more than willing to meet and share their experiences.
- Innovation seems to be a red-hot topic in every industry except health care.
Need More Information?
For more information, contact:
• Philip A. Newbold, MBA, Chief Executive Officer, Memorial Hospital and Health System, 615 N. Michigan St., South Bend, IN 46601. Telephone: (219) 284-7115. E-mail: [email protected].
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