Innovation is on the minds of everyone in healthcare, it seems, and with good reason. The 2018 deadline for alternative payment model reimbursement, the focus on quality and tight profit margins are just a few drivers. Many healthcare organizations are responding by establishing their own innovation center. John Gallagher, practice leader of innovation at Simpler Consulting, spoke with Clinical Innovation + Technology, about the trend.

Q: Are you surprised how many innovation centers are opening?

JG: I’m really not because with the pace at which change is being thrown at organizations, they’re not able to respond that quickly with traditional operational improvement. The Affordable Care Act will continue to bring reimbursement changes. The industry is set up for fee-for-service, but it’s moving to being paid for outcomes and we’re not getting there fast enough.

Q: Is establishing an innovation center a good move for most healthcare providers?

JG: I think it is worthwhile because each organization brings its own perspective. They need to eliminate waste in their processes and increase value to help healthcare achieve the triple aim.

Organizations have two responsibilities—1) to improve the way they do business today and 2) prepare for the future. With all of the changes going on in the healthcare landscape—the Affordable Care Act, population health, data analytics—we need bigger jumps than those just traditional improvements can bring. I believe there’s recognition that innovation is needed inside the industry.

Too often traditional healthcare organizations ask their physicians and staff to work on improvements and think about innovations. Innovation centers separate those responsibilities. It’s very difficult to mix the two. The innovation center concept allows folks to just focus on ideas for the future. There’s both a need, especially in care delivery but also an opportunity for organizations to develop innovation as a core competency.

Q: Which will of these centers do you think will do best?

JG: There’s no ideal model. I would look for the concepts they’re looking at. Often, we look at innovations as silos. The latest app comes out and we try to force it into a care model. The most successful look across the entire care continuum—a hospital system working with payers and outside providers, such that it brings in a reinvention of care models. A new app or technology—say, virtual visits—in and of itself is not necessarily a great innovation unless you can figure out how to incorporate it into your care delivery model. You also need the patient engaged in the journey and to ensure that information that gets into the system after the visit is really used to get healthier. A lot of different things go into play.

Q: What are the biggest obstacles to success?

JG: An innovation approach is not necessarily going to bring a return on investment in the first year or two. Organizations need to be patient. One of the dangers inside of innovation is trying to only fund it through the operations budget. Organizations look to grants and foundations, but we coach that those innovation centers at some point have to be able to stand on their own. Innovation centers can be funded by revenue generated by new products and services and cost reductions. You also have to consider quality outcome improvements because as we move from volume to value, providers will get reimbursed more on quality outcomes.

Q: Do you think more providers will open innovation centers?

JG: Yes, especially if some of these existing centers can bring out some big successes. I think healthcare will continue to develop innovation as a core competency and get better at it. Kaiser Permanente had a head start because of its business model which helped them look across the care continuum. A lot of people look to Cleveland Clinic for those changes. If organizations continue to look for ways to improve the health of the population not just the health of their organization, I think they’ll be successful.

Organizations are going to have to work closely together across the care continuum, not just in vertical silos. We can bring out new technologies but those in and of themselves aren’t going to be successful in helping organizations achieve the triple aim. It’s going to be an interesting time.