Table of Contents
Executive Summary. 3
The Business Model 7
Innovation Management Philosophy. 9
Organizational Innovation Management Strategy. 9
Environmental Factors affecting our business operations. 10
- The Internal Environment 10
- External Environment 11
Environmental Factors and the Getwell’s operational strategy. 11
Interactions between the Innovation policy and the operational corporate policy. 12
Our Product: Mobile Patient Diagnostic App – OrthoPet 12
The role of investors in orthopedic operations. 13
Currently, the US healthcare system suffers daunting economic and demographic challenges making adequate nurturing and management of medical innovation difficult. This makes innovation management in orthopedic clinics a least taken route. This is not only due to the unfavorable conditions but also the high costs of undertaking the related innovation management. Secondly, with musculoskeletal disorders presenting a substantial healthcare burden globally, novel approaches are increasingly becoming useful in the continued provision and administration of first class orthopedic care services affordably. With statistics indicating low access to the services globally, there is a dire need in having adequate innovation and talent management within the orthopedic field. This will therefore not only need having the innovations undertaken but also have adequate nurturing of the innovations as well as development of workable systems that allow the innovations fit into the existing business models deployed and used within the Medicare industry.
As best described by Christensen, the concept of “disruptive innovations” presents a great potential in establishing frameworks and strategies that fit into healthcare needs in diverse economies and within varied regulatory conditions. According to the Harvard professor, disruptive innovation can be used in cutting down on the operational costs while retaining high quality Medicare services – especially orthopedic services. To date, there are numerous developments which have revolutionized the way orthopedic services are offered. Most important of these is the Surgical Implant Generation Network (SIGN)’s mobile fluoroscopic imaging service; which has changes the way long bone fractures are handled in the world over. Others include the rise of ambulatory surgical centers and the expanding role played by physician assistants and nursing practitioners whose contribution cannot be down played in the shaping of the future of disruptive innovation process.
Getwell being an orthopedic clinic operating within the US regulated framework has not been spared by the evolutionary developments and challenges faced within the global orthopedic crisis. However, the most challenging has been the fact that like other orthopedic clinics that have marred by cultural and regulatory barriers leading to limited widespread adoption of “disruptive innovations” among orthopedic practitioners. This therefore limits the industry’s access to services preventing clinicians and other support staff in Medicare from fully taking up their discretionary roles; which could see a great improvement in the quality and ease of access to these important innovations in administering musculoskeletal disease control.
The cost of administering quality healthcare in the US has become one of the thorny issues that the public policy has not been able to fully address. Despite the increase in the percentage of the US GDP spending having been increased from 5% in the 1960’s to slightly over 15.2% in 2013, there is still a big room for improvement. This mainly comes through the inefficiencies in the service delivery coming from delayed response to healthcare problems or even the absence of the service; and at times the service available not being to the standard or even too expensive hence unreachable for most residents. To match the growing demand for the orthopedic and other Medicare services in the US, the Congressional Budget Office projects for adequate Medicare provision, the national spending on healthcare will increase to 30% by 2035 and approximately 50% of the GDP by the year 2082. Although the challenge is multi-layered with multifactorial challenges taking the center stage, analysts have pointed adoption of modern advanced healthcare innovations and technologies as the lead cost driver.
With US leading in global healthcare and biomedical research, we have presented our ability to develop the most sophisticated facilities that can address complex medical problems. As such, our ability to deliver first-class healthcare solutions to those needing them is greatly inadequate as illustrated by number of the uninsured or underinsured citizens. In addition to this, the challenges facing the nation still places us lower in the global ranking on public health measures relative to other developed economies. Thus, the future of both Med and healthcare strategy viability and implementation still lies heavily underneath the responsible adoption and implementation of well thought healthcare technologies and innovations.
With statistics indicating great Bio-medical inefficiencies over the past and the future demographic; morbidity and associated mortality trends, orthopedic surgery is expected to be greatly impacted by these impending economic issues. If the national healthcare statistics were anything to go by, musculoskeletal disorders and diseases cause the highest number of disabilities accounting for more than half of the chronic conditions in persons with over 50 years of age (American Academy of Orthopedic Surgeons, 2008). With recent statistics indicating about 83 million Americans having suffered at least one spine condition between 2002 and 2004; and over 40 million others arthritis and associated joint pains over the same period, there is a dire need for having adequate Medicare orthopedic innovations adopted. As if this was not enough, the reports further indicate an increase in the access to ambulatory services for musculoskeletal care to 508 million between 1996 and 1998; up from the 426 million casualties reported for the period between 2002 and 2004. According to the statistics, there was also a 69% increase in non-MD ambulatory services access over the same periods. With the magnitude of such still felt within the economy, the budgetary allocation for the prevention of curable musculoskeletal ailments in 2004; the year the statistics were released was jus a mare $849 billion – 7.7% of the total GDP. Over time, this has only slightly improved to slightly over 1 Trillion dollars in 2013. However, this 7.4% of the GDP allocation is still far below the expected if the over 700 millions needing such specialized medication were to be catered for. This is still far from reaching the expected benchmark minimum for the Medicare administration. According to the statistics, an estimated 52.5 million people were diagnosed with arthritis in 2013 alone with the figure projected to hit 67 million people by 2030. This would imply to sustained musculoskeletal complications to the over 49.7% of Americans aged 65 and over in 2030 (Issue Brief, 2007).
Though marred with these challenges, the American healthcare system still presents a great deal of optimism that if proper corrective strategies are deployed, the situation has the greatest potential of eliminating the musculoskeletal disorders and diseases. Despite these “costly” challenges facing the world’s largest economy, neither the demographic nor the economic challenge surmounts to an alarm for additional consideration in drafting the Congressional Budget. In his research, the Harvard professor, Clayton Christensen explores the immense opportunities presented by the adoption of cost effective and easy-to-implement strategies such as “Disruptive Innovations.” He and his colleagues further point out the invaluable benefits that come with implementing such a strategy in a clinical situation. According to them, this will not only improve on the efficiency of the system but also lead to increased economic improvement as the vast majority of citizens will be able to access Medicare affordably. As they point out, this will also lead to improved coordination of Medicare solutions among medical practitioners (Medical Management Association Report, 2003).
This paper details the operations that the New York based, Getwell Orthopedic clinic has put in place in initiating innovation management. It also implies to the outcomes of implementing the strategy in the classical orthopedic clinic situation as well the hurdles that still limit the optimal performance in innovation management within the clinic such as regulatory and cultural barriers.
The Business Model
Gatwell uses an integrated business model that incorporates Disruptive Innovation strategies, classical innovation management skills as well as a comprehensive healthcare package for all. Through this, the company has been able to expand the horizon for orthopedic patients by offering them practice centered novel and inventive healthcare solutions. To achieve this, the clinic employs a joint-venture integrated model approach where both internal and external research and innovation liaison is undertaken.
Through the implementation of the integrated model, Getwell has been able to establish sustainable innovation and talent management. Despite the model portraying a high level of integration, it presents simplistic ways of addressing customer needs.
As Christensen points out in his book, “ The Innovator’s dilemma,” disruptive innovations lead to the creation of simpler and more convenient in creating products and services that the demands of less demanding customers. According to him, every industry suffers disruptive innovations as a way of meeting the low-end user demands. In orthopedic services, this is not an exception. As a tool for tapping into disruptive innovation, Getwell clinic has established the supply of its products from reliable suppliers as well as employing cost effective ways in offering its orthopedic services. This leads to great cost reductions. With most other clinics offering similar services in the neighborhood targeting the high-end consumers, Getwell prides in serving the majority low-income earners in New York. Consequently, the clinic uses simplistic methods allowing us leverage on the benefits of low cost services as well as the mass numbers accessing our services. Another way of integrating the service into the customer’s systems is our deployment of many qualified orthopedic specialists through which internal information sharing and knowledge enhancement has played a crucial role in shaping us. However, this strategy has only proven to be such a successful model with time.
At the moment, 8 years after establishment, the business model adopted has stabilized and paid off. This has led to the performance model results for the model adopted being easily modeled using the below performance trajectory (fig.1).
The performance trajectory indicates that disruptive innovations lead to more sustainability of the clinic; though at a lower performance. Sustaining innovations on the other hand lead to higher performance at a lower sustainability. If deployed, then, the clinic would have operated for a shorter period since the sustainability of the clinic would have depended heavily on how competitive the services remained relative to those offered by competitors in the quest for the high-end market segment. However, adopting the disruptive innovation management strategy allowed us leverage on out internal capacities in meeting the needs of the low-end customers who are also less demanding. On the flip side, if the clinic operated with a target of the high end customers, the cost of meeting the customers; who are demanding would be high leading to lower sustainability of the clinic.
Though the initial strategy focused on offering universal orthopedic services to all patients, market selective forces such as price and quality of service differences have led to the consequential segmentation of customers accessing our services to mainly the low end consumers. With the pace of our sustaining innovation
Innovation Management Philosophy
The clinic’s innovation philosophy is anchored on information sharing and skill replenishing, collaboration and continued research. It therefore states that:
“Successful innovation begins with collaboration and information sharing”.
Based on this philosophy, the clinic has been able to successfully spur internal growth through the establishment of a private research unit within the clinic. Through the Getwell Orthopedic Research Center, the clinic promotes independent biomedical research through collaborative support and partnership with other institutions. By doing so, the clinic offers results led orthopedic solutions to healthcare problems through promoting collaborative innovation.
Organizational Innovation Management Strategy
Getwell Clinic has adequate staff and support systems for both the orthopedic Medicare and the research unit. This allows the clinic adequately man the creativity and innovation by nurturing and offering enhanced innovation support to the internal research and development department as well as other external researchers with innovative strategies. By having the bi-operational strategy, the clinic is able to adequately promote internal research and product development as well as influencing information sharing with members of the public. However, all researches undertaken internally or within our innovation center are patented under Getwell with all exclusive rights being vested with the clinic. However, the clinic at times allows innovators access some fringe benefits for their innovation. In case this is to be done, the clinic signs operational innovation and patent agreements with the innovators. Through such arrangements, the innovators get 40% of the overall returns from the use of the innovation. The other 60% goes to the Getwell Research Center to facilitate the innovation progress. In order to fully accommodate startups with excellent innovative ideas, we offer 1 – 3 year business incubation; a period during which the beneficiaries engage in fully funded research and fine-tuning of their idea prior to creation of their final product. This therefore illustrates the immense and otherwise under estimable role played by startups in shaping our business model. We also engage in nurturing business acumen for startups taking part of our innovation and business incubation.
Environmental Factors affecting our business operations
I. The Internal Environment
Surrounded by numerous possibilities and a wealth of innovation capabilities, Getwell clinic has structured an enabling environment to which the model fits. There include:
- Culture and Company policy
Getwell has a research oriented culture which supports the creation of first hand solutions to various challenges in Medicare and related fields. Through this, our establishment of the research center has helped the clinic expand its horizon of possibilities in research and innovation. As a result, the internal policy on research and innovation requires that only projects with excellent and viable market prospective returns are financed and patented by the clinic.
- Resource allocation
At Getwell, we deploy and use resources where the prospective returns are high. With the resource allocation policy being reviewed every year and the benchmarks evaluated periodically; the clinic has been able to establish workable resource allocation policies. These have mainly been anchored on the controlled budgetary planning and use of various project analysis tools in determining the viability of the projects and their associated activities. For instance, if a project is to get full funding within the clinic’s research center or other channels, then, the project has to be vetted by the innovation and talent management committee whose appraisal and consequent approval of the project must be illustrated by the innovator. In addition to this, every project undertaken must comply with the company’s research and development policy especially regarding patenting and the consequent expected benefit sharing agreements.
- Internal policy and believe systems
Getwell has an excellent internal policy that supports the development of internally managed systems. Other believe systems owed to the success of the clinic in the path towards realizing and actualizing its mission and vision, goals and objective as well as targets include the existence of socio-cultural believe system that allows for the development of high quality products. Though this policy, high quality projects are market-promoted at the institution’s expense and the innovators rewarded. In addition to this, at Getwell, there is adequate recognition of innovative developments. Through this, research and development is encouraged leading to the creation of an excellent operational framework within which talent, innovation and research are nurtured.
II. External Environment
- Public policy
Set to operate within the medical field, Getwell works under the orthopedic regulatory body. It also works in a tightly regulated healthcare environment where compliance with the ethics and health requirements remain a crucial part of any business operating in the US. As such, the clinic has its staff registered with the local labor department whose affiliation to the International Labor body requires compliance not only to the state labor laws but the International Labor regulations.
- Political and Cultural Factors
The clinic operates within a politically stable area. However, this is further enhanced through the clinic’s stand on political affairs and participation in political affairs. By the venture’s internal policy, the clinic or its management does not appraise, approve or support any political affair. However, the policy points out that it does not bar any member; staff, affiliate or partner form participating in political activities. However, the policy requires that the participation of such a member and or any political opinions given by the same person(s) do not indicate the stand point of the clinic or its management. By taking a neutral stand point, the clinic and its management immunizes itself from adverse activities that may deter its operations.
Environmental Factors and the Getwell’s operational strategy
Despite operating under the above described environment, Getwell clinic operates under a research oriented system. Through this, the clinic’s Research and Development team engages in periodic analysis of the emerging trends in the various areas of engagement of the company. With the R&D team expected to report to the management committee semi-annually on the industry trends, the clinics is able to keep track of the latest developments in the industry. This leads to the creation of excellent products and market-led solutions that adequately meet the customer needs. In addition to this, through the periodic research being undertaken by the clinic’s R & D team, the clinic has been able to develop adequate knowledge of the latest technologies that are able to meet the customer needs in the most effective way. Consequently, by deploying these strategies in administering customer needs, the clinic’s operational costs have been kept low leading to high efficiency in the business processes and systems.
Interactions between the Innovation policy and the operational corporate policy
Getwell is well anchored on the ability to create a tradeoff between the innovation and the corporate strategy. Through this, the clinic has well laid down procedures that determine the operations within the corporate scene such as brand and corporate image management and talent and innovation management among others. However, the clinic’s corporate culture is fully compliant with its internal innovation management policy. Through having well-structured corporate and innovation policies, the clinic has been able to institute the operationalization of the research and innovation center independent of the clinic’s operational strategy.
Our Product: Mobile Patient Diagnostic App – OrthoPet
Through our product development team and our investment in research and development paying off, Getwell has been able to develop among the most coveted for apps in the medical field –“OrthoPet.” This specialty mobile app, we are able to track the progress of our patients remotely. The most significant feature that makes the app different is its ability to remotely send customer progress reports to our database. This is done by monitoring of the customer’s muscle balance, body pressure among other factors that may affect the progress of the patient on the path towards recovery.
Developed by a Mobile App startup company six months ago, the App has become a vibrant tool that keeps us ahead of our competitors. First, the App automatically relays progress reports on customer progress without having the customer visit the clinic. Through this, the customer is able to cut on the costs associated with having periodic diagnostic checkups in our clinic. This disruptive innovation has not only enabled our customers keep their medical bills low but also enhanced our internal efficiency leading to improved service delivery.
Though still under evaluation ahead of its launch into the market later in the year, such innovative solutions can be achieved if research and innovation in orthopedic field and other fields alike is encouraged. With the positive response in all other 3 clinics where the same is still under evaluation, the management is confident that the App will transform the administration of healthcare in US and beyond.
If nurtured well, innovation remains a crucial area that companies that the industry can reap big from. However, the level of innovation has to be well monitored with adequate checks and balances put in place to avoid problems associated with poor innovation and talent management. In addition to this, young talent and innovation through startups should be nurtured as it facilitates the growth of the industry. However, for the best results, proper regulatory measures and orthopreneurial skills be nurtured through incubation of startups. By doing so, all the untapped talent and innovation can be brought onboard leading to improved efficiency of the industry at large.
The role of investors in orthopedic operations
Like other businesses, orthopedic businesses need capitation. However, with the industry finding statistics indicating dwindling performance in finding activities, there is a dire need for proper funding to the industry being done. Much plea is to the private sector and private investors whose effects can be deep felt in shaping the industry while touching lives. In return, with the market capitation still very low, there is a big room for improvement with assured exceptionally high performance. Currently, the industry has low capitation form the government as well as the capital ventures. However, many thanks to the capital ventures for their continued support to the industry. This implies to the great role the capital venture arrangements have played in shaping orthopedic operations in US and elsewhere around the globe. However, in my genuine opinion, the market is prime and highly lucrative and thus, more is expected from venture capitals, universities and research centers as well as private investment companies.
Despite the orthopedic services being highly demanded in the US and elsewhere around the globe, little has been done in countering this need. This has mainly resulted due to reduced investment in healthcare as well as the unplanned and untapped innovation and creativity talent. If the orthopedic field is to meet the demand, then, proper management of innovation and hefty investment to the field through private venture capital investment shall be required. By addition more funding to the about 1 Trillion dollar government investment, the county will at least be optimistic of having the number of casualties requiring the service reduce. Consequently, this is expected to see a great improvement on the quality of Medicare services offered today leading to a great reduction in the number of deaths resulting from treatable orthopedic complications. An example of excellent talent and innovation management whose fruits have paid off through deployment of integrated descriptive innovation techniques is the Getwell clinic. The clinic has not only realized the benefits of tapping into the local innovation but also encouraged research leading to the creation of cost efficient orthopedic Medicare solutions. More can be done to halt the situation. Through this, disruptive innovation management techniques should be deployed for the most effective and efficient implementation of healthcare topologies that will remain both sustainable and competitive both in the short and long-run.
US Bone and Joint Decade: The Burden of Musculoskeletal Diseases in the United States. Rosemont, IL: American Academy of Orthopedic Surgeons; 2008.
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Christensen C. M, Bohmer R. M. J, Kenagy J. Will disruptive innovations cure health care? Harvard Business Review.2000;September-October:102–117.
Issue Brief: Physician Assistants in Orthopaedic Surgery. Available at:www.aapa.org/gandp/issuebrief/orthosurg.pdf. Accessed March 20, 2014.
Medical Group Management Association. Physician Compensation and Production Survey: 2003 Report Based on 2002 Data. Available at: www.aapa.org/gandp/issuebrief/orthosurg.pdf. Accessed March 20, 2014.