The challenge of speed in healthcare as technology puts its foot on the accelerator

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1 The challenge of speed: Healthcare About the research The report is based on a survey of 461 senior, Europe-based executives. Of these, 59 work in the healthcare sector, including hospitals, medical equipment manufacturers and pharmaceutical companies. More than half (52%) of respondent companies have annual incomes over US$500m. The survey sample is senior, with 49% at C-level or above, and a further 23% senior vice presidents, vice presidents or directors. In addition, The Economist Intelligence Unit conducted four in-depth interviews with healthcare leaders, as well as substantial desk research. This article aims to offer some guidance to managers in healthcare hoping to drive greater process speed and harness the potential of changing technologies to better serve their organisational goals. The challenge of speed in healthcare as technology puts its foot on the accelerator The healthcare sector needs to change faster. There is pressure to improve existing administrative processes and interoperability between systems, while at the same time increasing the awareness of patients and the skills of healthcare professionals. How else can the sector modernise quickly enough to deliver the preventive medicines and personal health support required to meet the growing demand? In a survey conducted to better understand the speed of change, a mere 24% of healthcare respondents said that they can rapidly adapt to unexpected market opportunities. This explains why 98% of those surveyed are feeling at least some level of personal pressure to adapt to rapid changes. Technology change is fuelling this pressure to adapt ever more quickly. Respondents in the survey believe that new technology platforms will have the biggest impact on their business models over the next three years, in particular the growth of data and analytics. But as the experts interviewed for this report explain, real agility for the healthcare sector requires that organisations learn to adapt their core business processes while mastering their use of technology. This, many healthcare executives believe, will be where they will see the greatest change in the coming years, and where most value can be delivered. AN ECONOMIST INTELLIGENCE UNIT RESEARCH PROGRAMME SPONSORED BY

2 Europe s healthcare future is digital Healthcare reform and the need to change are not new. But the EU s most recent ehealth action plan, unveiled in 2012, is moving things forward more quickly. This plan supports the use of digital technology to transform the healthcare sector. As the European Commission affirms: Because Europeans live longer than ever, and because of new and expensive treatments, the costs of health and social care will rise substantially to about 9% of EU GDP in ICT can be our most powerful ally to maintain cost-efficient and high-quality health and social care, as it empowers people of every age to better manage their health and quality of life, in any place. Already, many patients and health professionals are using telehealth solutions the delivery of health services and information over digital networks. And millions of Europeans have downloaded smartphone apps to keep track of their health and wellbeing. A lot of the change is focused on lifestyle and prevention, keeping healthy people healthy, and is fuelled by personal empowerment, by mobile apps and self-tracking. It s bottom-up, says Claus Burci Nielsen, vice chair of the Continua Health Alliance, an international, non-profit organisation which promotes plug and play standards for digital healthcare data. Yet in some ways this may not be coming fast enough. Peter Ohnemus, the chief executive officer of Dacadoo, a health-tracking company based in Switzerland, warns: Europe had the lead in mobile in the 1990s (with Siemens, Philips, Nokia, Alcatel and Ericsson) and lost it. Digital healthcare will turn out to be exactly the same if Europe is not moving its innovation forward and leaving the politics behind. Digital health is driven by the consumers. The EU s action plan attempts to increase the pace of change and improvement in healthcare by focusing on three areas: broader deployment of telemedicine, increased patient access to healthcare data, and improved interoperability across systems. This latter concern is especially acute: in the survey, healthcare executives lead all other industries in citing effectively linking our technology platforms as a key bottleneck to increasing agility, with 42% saying it is holding back their efforts to change. Accelerating core processes When asked where they expect to see the most change in the next three years, 41% of healthcare executives cite improving their core business processes. This is also the area of change most frequently described as crucial to their business, alongside recruitment, customer retention and supply-chain optimisation. Clearly, both the flexibility and the speed of core processes are central to the agility of the organisation. So how prepared is the healthcare sector? Healthcare executives are notably more 2

3 confident of their ability to adapt their core processes than the average across all sectors (35%), with 51% believing they are faster than their competitors. And while the healthcare sector has a reputation for being bureaucratic and the many-layered, siloed structure of bureaucracies can hinder agility, respondents are less likely to list bureaucratic process controls among their gravest barriers to increasing process speed. They tend to emphasis the lack of a clear business objective, time constraints of relevant business executives, and legacy technology platforms. Indeed, technology offers constraints as well as opportunities. Respondents to the survey identify technology as the functional area where changing at speed poses at risk, and effectively linking all our technology platforms is seen as the number one bottleneck to achieving greater agility. How would you estimate your organisations speed in the following: Adapting your core business processes. Please select the most appropriate (%) Healthcare All Slower Source: The Economist Intelligence Unit. The same Faster As these statistics reveal, getting IT right for healthcare systems is challenging. Part of this is platform-specific. Enterprise technology hasn t kept up with the way people access data now, says Mr Nielsen. The younger generation does everything on mobile phones or tablets. Government and regional services require logging in on an old-fashioned laptop or desktop. Everyone says that accessing health data will come easily to young people, but I think the reality is the opposite unless we rapidly keep up with the technology that people are actually using. 3

4 Top ten changes in business model - next three years (%) Healtcare Industries Customer base Composition of senior management Supply chain Product mix Geographic footprint Financing sources Composition of your workforce Core business processes Cost structure Technology platforms Source: The Economist Intelligence Unit. Adapting technology platforms is a must, however. The majority of healthcare executives (51%) list technology platforms among the aspects of their business model they expect to change most over the next three years, compared with 41% across all sectors. Opportunities in technology If companies do not manage it appropriately, technology can be both a barrier to change and a change-driver, in that it is reshaping market conditions and patient expectations. But, of course, technology can also be a competitive differentiator, if healthcare companies can adopt it and adapt to it fast enough. When asked which technologies would have the biggest potential to improve healthcare over the next three years, two responses stand out. Among healthcare executives, 42% choose data analytics (versus 29% for respondents from all sectors), while 31% opt for the Internet of Things (versus 16% for the broader group). Healthcare is the only industry sector surveyed that focuses on the Internet of Things, an area of innovation that bridges the physical and the digital. 4

5 In fact, there is considerable overlap between the two technology trends, since biosensors can open a floodgate of real-time data that can be analysed in order to improve research results, health outcomes or any high-stakes process in which an intervention leads to some beneficial result. Some healthcare companies are looking to other industries to learn how to cope with the growing velocity of data (the speed with which it is produced and how fast it needs to be analysed). We have a partnership with McLaren (a high-performance automotive business), which is a very data-driven company. They make instant decisions about the performance of their cars and drivers by collecting and analysing data in real time, says Steve Mayhew, head of R&D strategy development at GlaxoSmithKline in the UK. There are parallels in our industry. The ability to collect and analyse large and complex data sets can be used by healthcare companies like GSK to collect patient data remotely and continuously in order to better understand the effects of our medicines. We can respond more quickly than through our standard clinical trial model. Indeed, by using data and analysis in a more agile fashion, healthcare companies are addressing another critical risk factor identified by the survey: research and development (R&D). Over one-third of healthcare respondents (36%) identify R&D as an area where changing at speed poses a risk, twice the 18% average across all sectors. GlaxoSmithKline, for example, is using more frequent analysis to de-risk drug trials, an expensive component of drug development. When we ve done a research study or clinical study to test a hypothesis, we usually have to wait until the end of the study to see the analysis of the data, says Dr Mayhew. I think we re now coming to the point of collecting and monitoring the data in a continuous way, so we can make decisions during the study, not just afterwards. But to really drive value for the business requires changes to the way the organisation works. As Dr Mayhew explains: We ve created a number of smaller, more flexible units within our early-stage research environment as well as our clinical development environment. Those units specialise in particular scientific disciplines. That allows us to quickly scale up investments when they re promising and scale them down if they don t play out as we anticipated. Stephen Cleaver, executive director of informatics systems at the Novartis Institutes for Biomedical Research (NIBR), argues that providing research scientists with the analytical software tools they need allows them to answer more questions, faster. Technologies such as gene sequencing are producing more biomedical research data than ever before, and the methods used to analyse these data are evolving rapidly. He has therefore made sure that the company s software development processes are as agile as possible. If a researcher wants to look at the data in a certain way, the informatics systems team will quickly produce a user interface that allows them to explore the possibilities without waiting weeks or months. In order to do this, however, the team has to integrate a variety of data sets whose size and complexity are growing rapidly by the day. According to Dr Cleaver: Data integration is the real key for all of this. 5

6 Conclusion There are risks involved in operating at greater speed, but healthcare organisations are only beginning to tap into the potential benefits. Europe s healthcare sector has the opportunity for still greater gains. This year should see the development of the legal framework for the EU s ehealth interoperability initiatives and larger-scale integration of crossborder health services through the seed funding and technical assistance of the European Commission s Connecting Europe Facility. This should more closely integrate the single market for health services in Europe and help deliver better health outcomes for Europe s patients. The examples in this article emphasise the need to keep up with healthcare s accelerating pace of change. While there is no clear consensus on what should be prioritised first, respondents surveyed tend to expect major changes to come from improving their core processes, and they agree that technology platforms will probably have the biggest impact on their business models. Harnessing greater speed will require more effective data integration and real-time monitoring. But leveraging the gains from new technology requires organisational structures that are able to adapt and scale up quickly to respond to the organisation s changing opportunities. Ultimately, being faster isn t about winning a race, it s about delivering better healthcare. 6

7 About the sponsor Ricoh provides technology and services that can help organisations worldwide to optimise business document processes. Offerings include managed document services, production printing, office solutions and IT services. Whilst every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in the white paper. 7

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