Posted: 02 May 2023 5 min. read

Health systems seek relationships with health tech innovators

By Peter Micca, partner, National Health Tech Practice leader, Deloitte & Touche LLP

Health systems tend to rely on third-party vendors for everything from medical supplies to laundry and food services to telehealth platforms to electronic medical record (EMR) systems. The average health system has relationships with more than 1,300 vendors.1 A growing number of health systems are looking to streamline their rosters and transition from transactional relationships to symbiotic, strategic partnerships with health tech innovators. The goal of this strategy is to simplify operations, reduce costs and clinician burnout, and improve patient outcomes and experiences.

I recently moderated a panel at the ViVE conference in Nashville that explored some of the challenges and benefits of partnering with health tech innovators to help build a frictionless care community. (See my colleague Jay Bhatt’s recent blog about his ViVE session on techquity.)

Rather than just purchasing products or services from vendors, some health systems want to work more closely with a few health tech innovators to co-develop solutions that can solve problems in a unique way, explained B.J. Moore, chief information officer and executive vice president of Real Estate Strategy and Operations at Providence Health & Services. Such a strategy could benefit both the health system and the health tech innovator. A successful partnership with one health system might help a health tech innovator win future contracts with other health systems, he told attendees. “That would be a win-win,” he said. Providence operates more than 50 hospitals and 1,000 clinics across five western states.

According to our latest Health Tech Trends report, some companies (as well as their investors) want to move beyond the traditional pipeline model of selling products and services. Instead, they are interested in collaborating with health systems to test new solutions and jointly build platform-enabled ecosystems. B.J. suggested that some health tech innovators might be more nimble than legacy vendors and more willing to experiment and take risks.

For such partnerships to succeed, the health system needs to find the right health tech innovator. The health system should also identify a visionary internal team. While some staff members are good at working through existing processes to reach the desired outcome, they may find it more challenging to think outside of the box. Other staffers might be able to evaluate processes and envision better and more efficient ways of doing things. Those are the people who should be part of the health system’s innovation team. This internal team should be willing to experiment and provide feedback on imperfect solutions, BJ said. They also should be willing to fail fast, learn, and redevelop quickly.

Four attributes health systems generally want from health tech innovators

Here are four key attributes the panel said they look for when evaluating possible strategic partners:

  • Shared values: Innovation leaders should identify potential partners that have values that mirror the health system’s values, suggested Karen Murphy, Ph.D., RN, executive vice president and chief innovation officer at Geisinger Health System. If a health tech innovator is not as committed to improvement as the health system, the partnership is unlikely to result in the best solution. Ideally, solutions should be convenient, transparent, and frictionless, added another panelist.
  • A focus on the patient experience: The retail, travel, and entertainment sectors have made it possible for people to get products and services whenever and wherever they want. Consumers have come to expect a similar consumer-centric experience from health care. The health sector, however, is just beginning that journey. A frictionless and transparent solution that reduces steps or streamlines processes is more likely to be accepted and used by staff. Moreover, health systems that appeal to consumers will be more likely to retain existing customer relationships and attract new ones. 
  • A willingness to fail fast, not give up, and learn and redevelop quickly: Failures can be an important part of success. Karen said innovation leaders should be able to quickly evaluate a solution and determine if it will generate value to the system, the clinicians, and the patients. She said she has experienced more losses than wins but tries not to make the same mistakes twice. B.J. agreed that it is important for innovation leaders to take risks and not be afraid of potential failure.
  • Revolutionary thinking: Many health systems are becoming increasingly digital and have incorporated new types of technology. But technology is just one piece of the digital transformation puzzle. Digital solutions should do more than just automate an analog task. They should revolutionize a process or significantly improve the experience, B.J. said.

Three strategic pillars

When working with a strategic partner, B.J. said he tries to follow three strategic pillars—simplification, modernization, and innovation. Health tech innovators should start by simplifying the existing ecosystem rather than adding steps to existing processes. The next pillar is to modernize the existing system. Once a simplified and modernized ecosystem is in place, the final step is to innovate. “You cannot start out trying to innovate. You have to follow the steps,” he said. Karen noted that the goal is to transform health care. Innovation leaders should prioritize problems and focus on those that will result in a higher quality experience or care at a lower cost, she said.

The panel discussion at ViVE highlighted the potential of platform-enabled ecosystem where stakeholders work collectively to solve some of the most significant challenges in health care. By leveraging the collective power of their users and partners, platform businesses have the potential to create more value for health systems, staff, and consumers than traditional pipeline businesses.

The executives’ participation in this article are solely for educational purposes based on their knowledge of the subject and the views expressed by them are solely their own. This article should not be deemed or construed to be for the purpose of soliciting business for any of the companies mentioned, nor does Deloitte advocate or endorse the services or products provided by these companies.

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.

Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

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1Hospitals are paying for not vetting their vendors, Healthcare IT News, July 11, 2019

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