Defining Innovation in U.S. Healthcare

February 22, 2016 Bob DeVol

The healthcare industry in the U.S. has been characterized as unsustainable due to high healthcare costs, a flawed payment system and a growing demand with an aging population. In order for the industry to address these issues, the system must change. The goal is to create a delivery system that is patient-centric, timely, equitable, safe, efficient and effective. One that rewards value, not volume. But, how do we do successfully make this transformation?

Innovation must play a key role in driving meaningful change. So, let’s take a closer look at innovation and how it can help in a transformational journey.

Defining Innovation

The Merriam-Webster’s dictionary defines innovation as the act of introducing new ideas, knowledge, methodologies, processes, services and technology. However, innovation can also happen when you use old ideas, knowledge, methodologies or processes differently than they have ever been used before.

Innovation can be generalized as one of two types:

  1. Sustaining innovation. Brought about by incremental advances in current processes and technology. It can be a continuous, evolutionary process or an intermittent, transformative process.
  2. Disruptive innovation. Brought on by unanticipated innovations that create new markets or disrupt existing markets.


Uber is a strong example of sustaining innovation. They took an existing concept and used it differently. Essentially, Uber offers the same service as any taxi company; a customer pays a driver to pick them up and take them to their final destination. By leveraging new technology, creating a user friendly app and automating the payment process, Uber turned ride hailing into a white glove service and created a completely different user experience.

Disruptive innovation can be explained by Netflix’s business strategy. New technological advancements allowed Netflix to provide their customers with instant access to movies and TV shows of their choice that they could stream online whenever they wanted. Their model put previous competitor, Blockbuster, out of business and completely disrupted the movie rental and now the TV industry.

The Source of Innovation

Both sustaining and disruptive innovation occur naturally in business, and can come from many different sources, including:

  • User innovation. Not satisfied by existing processes or products, individuals or organizations develop innovation in response to a specific need. An example is the QUEST® collaborative. Through QUEST, 350 providers incrementally share best practices across their health systems nationwide. They achieved a 39% reduction in mortality in six years.
  • Open innovation. Acquiring external sources of innovation or sharing internally developed innovation. This method accelerates knowledge exchange, process improvement and product development. For example, when hospitals use Apple’s HealthKit as a consumer engagement strategy.
  • Co-innovation. Collaboration based on shared market needs and complementary competencies to develop more cost-effective products and services, such as how Premier works with member health systems on data warehousing and population health management solutions in its Data Alliance Collaborative.
  • Manufacturer innovation. Using scientific methodology to create novel or original inventions that support innovation. An example is the emergence of PCR (polymerase chain reaction) based rapid diagnostic tests. As part of an antimicrobial stewardship program, PCR helps reduce drug resistance risk.


Innovation in Your Healthcare Organization

Using a framework for type and sources of innovation can help you decide when and how to innovate. For example, your health system may be designing a population health management strategy for diabetes:

  • You may identify a disruptive innovation strategy through your community health needs assessment. Then you might work with local grocery stores to promote a healthy diet campaign.
  • You may choose a sustaining innovation strategy as you incrementally develop your physician partnership strategy. It could include identifying entrepreneurial physician leaders (i.e., user innovation) as consensus builders to develop diabetes care protocols.
  • When dealing with tough clinical challenges like medication adherence, an open innovation strategy may include polling peers to identify better practices.
  • A co-innovation strategy with a data registry may be required to translate EMR data into population health analytics and actionable intelligence.
  • Or you might leverage manufacturer innovation to take advantage of cost-effective processes and technologies that align with your care management strategy (i.e., a robotic pharmacy system, drug delivery devices or wound care technology).


With time and practice, it is possible to build innovation competency. This will be a crucial skill for your organization as the healthcare industry continues to change, especially given that 2016 is an election year. What other factors will be impacting innovation in healthcare this year? CLICK HERE to find out.

Author information

Bob DeVol

Bob DeVol

I support Premier’s Healthcare Innovators Collaborative. This educational collaborative focuses on our supplier community. The purpose is to help our suppliers understand healthcare reform and explore innovative approaches to align and support population-based care management strategies. When I am not working, you will find me spending time with my family, doing volunteer work and finishing a basement.


The post Defining Innovation in U.S. Healthcare appeared first on Action For Better Healthcare.


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