Where Are the Cheap and Curative Pills?
September 24, 2015
High priced pharmaceuticals have been a hot news item of late. Costs in excess of $100,000 per year are ever more common; pharmaceutical companies are becoming ever more aggressive in raising prices; Hillary Clinton is making the issue a central thrust in her presidential campaign.
Do these drugs deliver value that is commensurate with their price? Some may, but I’ll wager that most of you can name at least one new drug within your specialty that offers only a marginal benefit over its predecessor and yet costs far more.
What ever happened to the cheap and curative pill? Where are the modern day drugs like penicillin … drugs that restore health, mitigate the need for expensive hospital care, and, on top of all that, do minimal damage to the wallet?
Those days may be past. Indeed, look in most any industry and you’ll find that innovation trajectories tend to flatten over time. The costs of R&D escalate; the benefits decline. Reinvigorating innovation in a stagnating industry generally requires not doubling down on the current trajectory but finding a completely new one.
And that is where there is very good news in health care. There is an entirely different hunting ground, one that is rich and abundant in opportunity.
The trick is to recognize that modern day cheap and curative elixirs are not pills, nor are they devices, procedures, or gadgets. Instead, they are innovations in the way care is delivered. These opportunities have been sitting right under our noses for decades. They have been overlooked because of our understandable obsession with innovation in the biosciences and because of the poisonous incentives built into fee-for-service medicine.
Despite these barriers, there are plentiful examples of innovations in health care delivery that are producing dramatic double wins: double-digit percentage improvements in outcomes and simultaneous double-digit reductions in cost. New models for primary care, high-volume surgical centers, clinics that coordinate all care for a particular medical condition, and more. Nonetheless, I estimate that we have tapped into no more than a few percent of the total potential in this area. Now, thanks to the ongoing transition to value-based payments, innovations in health care delivery are nearer at hand than ever before.
To many “innovation in health care delivery” sounds a lot like “quality improvement.” There is certainly overlap, and I see little value in trying to draw a sharp boundary between the two.
That said, quality improvement programs are not typically designed in a way that will capture the largest opportunities. They are shaped as “all hands” efforts. Everybody can be an innovator, every day. This approach can be powerful in generating ideas, employee engagement, and a large number of incremental wins.
Going after the bigger victories, however, requires senior leaders in health systems, hospitals, medical groups, and clinics to take a crucial step: to commission full time Dedicated Teams to build a new model of care from scratch for a particular patient population. To create a Dedicated Team is to walk through a gateway to a world of tremendous untapped potential.
These teams need not be large. Indeed, I’ve studied some that start with just two people. That said, full time is essential. Part time innovation teams are minimally effective. They are constantly tugged back to their “day jobs.” Furthermore, part time teams are inherently inflexible. You can’t reorganize them. You can’t redefine roles, responsibilities, and work processes from scratch. Doing so is impossibly disruptive to team members’ existing work.
Many health organizations are stunningly resistant to the creation of Dedicated Teams. Due to differences between the capital budgeting process and the one for approving new job descriptions, it can seem easier to approve a $100M new building than it is to create a small team.
This is a barrier that we must get beyond. The risks associated with innovation efforts led by Dedicated Teams are small compared to other risks that are routinely taken in health care. Dollars invested are small. And, under value-based payments, the break-even point is near at hand.
In future articles, I will write more about what it takes for Dedicated Teams to succeed.