Goodbye to All That

It’s easy to see the end of things, to grasp intuitively that you’re standing astride some sort of stark rupture in the historical timeline, a point between rot and genesis, to know that you’ve stayed too long at The Fair.

“We don’t know if we’re going to succeed, but we do know is what’s in place today isn’t working,” says Novartis president Marie-France Tschudin,. “We need to take a different approach.” She was describing the need to re-conceptualize strategy for the launch of a new heart drug (see here in the Wall Street Journal last month), but her vision echos an ask for something deeper, more fundamental, that’s bouncing across the halls of nearly all business and government and academic settings in the West: a complete overhaul in the nature of “strategy” itself.

And so what's emerging as the building blocks for professional success today are management teams who can work with a new set rules that have imposed themselves (or been imposed by others) on the old order of things,

Rather than simply riding the bouncing ball and fighting to avoid being on the bottom when it bounces, it’s time for “leadership” to start working with a new cognitive pattern, a Punk Rock ethos for disruption.

“As 2022 draws near, it is time to face the world’s predictable unpredictability,” write The Economist in The New Normal is Already Here. Get Used to It, its commentary closing out 2021. “The pattern for the rest of 2020s is not the familiar routine of the pre-covid years, but the turmoil and bewilderment of the pandemic era. The new normal is already here.. Any boss who thinks their industry is immune to such wild dynamism is unlikely to last long”

Change comes in three wavelengths: There are changes to the game, changes in the rules of the game, and changes in how the rules are changed. 

It's legacy thinking -- not technology -- that's maybe the biggest barrier to navigating the transition space to a new era. Leadership teams become kinetically-trapped in outmoded structures, orientations, incentives and schools of thought, doomed to be, always, in defense of whatever business model allowed them to be successful in the first place. Most "digital transformations" reinforce the obsolete.

Said differently, we tend to put the new operating model ahead of the new thinking model.

We keep re-submerging ourselves in familiar storylines. Having normalized cliche, "old" narratives have veto power over the new, keeping us running on the watery residue of the past. Incrementalism edges out exploration.

We tinker in proven domains.

Existential crises abound (look no further than Biogen trying to sell itself to Samsung after its disastrous rollout of Adhulem, cryptocurrencies threat to central banks, or at the geopolitical level, the cracking of United States leadership and the rise of China “remaking the international system” according to its rules). The world is now littered with dying companies, markets and industries buying into the myth of a simple recipe, the allure of new technology, and an obsession with tradition as they search for optimal solutions that don’t exist. 

It’s the ‘leadership margin’ that now separates: you have to be comfortable crossing the river as you’re feeling for the stones. The skill in short supply is not technical, but visionary, able to articulate and propagate a new direction, a ‘modern strategy’ to manage a new interface layer with the world.

We have to rearrange the comfortable mental furniture from which we sit and guide thought and action, hoping for the best from legacy operating models. The hard thing is to “break the golden rhythm” of the place in our minds that we know has stopped working for us intellectually, creatively and spiritually.

“I could not tell you when I began to understand that. All I know is that it was very bad when I was twenty-eight. Everything that was said to me I seemed to have heard before, and I could no longer listen. I could no longer sit in little bars near Grand Central and listen to someone complaining of his wife’s inability to cope with the help while he missed another train to Connecticut. I no longer had any interest in hearing about the advances other people had received from their publishers, about plays that were having second-act troubles in Philadelphia, or about people I would like very much if I just came out to meet them. I had already met them, always.”

Joan Didion, Goodbye to All That

It's time to sweep the old concepts out of the saddle, start working with a new category of ideas🤘

/ jgs

John G. Singer is Executive Director of Blue Spoon Consulting, a global leader in Strategy and Innovation at a System Level. Blue Spoon was the first to apply systems thinking to solve complex market access and integration challenges in the pharmaceutical industry.

The Strategy That Didn't Fix Healthcare

“The market” was terrified when Warren Buffett, Jamie Dimon and Jeff Bezos got together to disrupt healthcare three years ago with the launch of Haven -- in response to that news, health care stocks comprising a significant chunk of the $3.5 trillion health economy in the United States shed billions in value overnight. CVS Health, Walmart, Cardinal Health and Express Scripts were among those affected.

Few details about Haven emerged after the new venture was announced to the public in January 2018 (to be technically accurate, the Haven brand name didn’t appear until about a year later, in March 2019; before that, the business was initially referred to by the initials of its partners: ABC or ABJ). Haven kept its cards close to its chest, saying only that it was going to “explore a wide range of healthcare solutions, as well as pilot new ways to make primary care easier to access, insurance benefits simpler to understand and easier to use, and prescription drugs more affordable.” 

The fact that three companies have come together to say that they’ve had enough with the status quo is a big deal, argued Matthew Holt, a managing director who specializes in health at private equity firm New Mountain Capital, at the time. “These execs have influence in the market by simply standing up and talking about inefficiency and cost,” he explained in an interview with CNBC. 

At J.P. Morgan’s annual health care conference in January 2018, Dimon hosted a private dinner for about 25 top executives from pharmaceutical companies –- the simple target and go-to-source of The Problem –- and advocated for lower drug prices. He told his dinner guests, “we are not happy with health-care costs and want to help.” Dimon was peppered with questions about the end state vision for the joint-venture and its roadmap to get there, especially after Amazon purchased online pharmacy PillPack. 

Last week, Haven announced it is shutting down.. Little information has came from the company itself on the decision-making to end operations, merely stating that its founding companies would collaborate further in the future.

Among the galaxy of analysis speculating about why ‘Project Haven’ didn’t work as planned, this headline from Barron’s captures the root issue: JPMorgan, Amazon, and Berkshire Hathaway’s Health-Care Venture Dies. Costs Remain a Problem.

“Cost” isn’t The Problem. The ‘production of health’ is.

The Unmet Need: A New Conceptual Framework

There is a perpetual short circuit in thinking about ‘the next healthcare.’ 

In the early summer of 1967, President Lyndon B. Johnson convened a National Conference on Medical Costs. It brought together more than 300 of the Nation's health leaders, representing providers of health services, as well as the ultimate consumers of health care services, patients themselves (the birth of "patient-centered" health care).

The membership of the Conference included healthcare professionals specializing in medicine, dentistry, pharmacy, economics, administration, and in other relevant disciplines. They were the best (American) medical minds and scientists the world had to offer at the time, representing a significant proportion of the men and women in this nation who studied the rising costs of health care and the effect of these costs "on the availability of medical care to all Americans.”

Then, as now, "urgency" and "crisis" dominated the storyline.

In its final report delivered to this country’s executive leadership at the time, the members of the Conference said there was “an urgent need for a wide range of actions to deal with the rising costs of medical care.”

There were projections of structural and supply chain problems arising from increasing demands for health manpower; how best to expand and strengthen the availability of health personnel was the subject of deep discussion and analysis, as it still is today (Some of the states hardest hit by COVID-19 are turning to retired healthcare workers and medical students to fill gaps left by an already tight labor supply and an influx of patients. See “Retirees, medical students called to help treat COVID-19 patients”). 

Their assessment:

“Even the most optimistic estimates of future manpower in the health services indicate chronic shortages for the foreseeable future. Emphasis was placed not only on the need for more physicians, dentists, nurses and other health personnel, but for the development of new and better ways to utilize the available and future supplies.”

The U.S. health economy is little changed since then –- it is still organized as inputs for niche impacts, not outcomes from a coherent whole. We are governed by the logic of market fragmentation. At an individual level, the story is everyone doing the “right thing” to protect and grow their businesses, brands and shareholders. At a system level, the story is collapse, a function of the design flaw in the orientation of the economics. The center of gravity is value extraction for shareholder benefit, not value creation for stakeholder benefit. 

America is flailing to reshape healthcare because the storyline of “cost” and “simplifying insurance” is perpetuating feedback loops that haven’t changed in more than 50 years. If the ambition is to “disrupt” the status quo, to transcend the current state and leap into a new orbit for action and imagination, we need different words to think different thoughts.

Until then, we're flailing in a vacuum of new energy and ideas.

Recurring Revenue from 75 Percent of the US Population

 ‘Continuous health engagement’ is the real disruption in healthcare. 

Which is where the “old” Amazon already excels – the company is managing a growing economic system that generates $322 billion in recurring revenue a year from approximately 75 percent of the U.S. population.

Strategy and innovation at a system level is the story behind all other stories about what it means to “transform” the dominant perceptions constraining healthcare (+ life sciences). It means adapting to a massive shift underway in how the world works and thinks, and what consumers expect. Positioning business models for value-based success comes from thinking outside the clinical setting -- less "patient engagement” and “patient adherence" to a drug or device, more "consumer engagement" and experience within a larger context of health system innovation. Less about “cost,” more about ‘the production of health’ over time.

 Shortly before the news of Haven’s disbanding came out, Atul Gawande, the ex-CEO of the venture, talked with Fast Company about his experience at Haven and the evolving business of healthcare in the U.S. He shared this perspective:

 “Places like a Walmart or an Amazon or others who are in the services side have paid a huge amount of attention to the experiences of the person who comes through to make it a better experience for them,” said Gawande. “A lot of discipline around cost and a recognition of how important it is to drive for scale. Those are the things we do not bring in healthcare. They need to marry that with a deep understanding of the complexities in healthcare and building relationships that are not just about the momentary transaction, but the reality that people need someone who will stay with them for years of their life. You can create incredible outcomes for people when you enable that relationship.”

The roadmap is about creating and competing with durable systems of engagement.

Like Amazon and Apple (and Epic), the end state is positioning yourself as an infrastructural technology, to become the dominant design for healthcare delivery in the United States, the backbone to match clinical outcomes with business and administrative processes. New Strategy starts with interoperability at a national level. 

The complex reality of the current chaos of collapse -- including that of Haven -- is that we all are going to have to re-examine some of our dearest shibboleths. The rules governing and constraining mindsets no longer work for multiple shifting paradigms. The unmet need is a new science of synthesis, a new conceptual frame to solve for market fragmentation.

Which is to say the "Strategy That Will Fix Healthcare" will have little to do with fixing healthcare; it has more to do with large-scale system change to invent an economy from new source material. We are standing astride a stark rupture in the historical timeline. The world is in motion, searching for an alternative equilibrium, a different consciousness from which to see, think and act.

"Haven’s [demise], and the fact that its anticipated disruption of the health care insurance space never materialized, also underlines the difficulty inherent lowering healthcare costs for employers. Even with some of the best minds in the business on staff, and the resources of three of America's largest corporations at their disposal, Haven doesn't seem to have cracked the problem," wrote Josh Nathan-Kazis, a reporter at Barron’s covering the healthcare industry. “Costs remain a problem.”

Perhaps everyone is still trying to crack the wrong problem.

If we’ve learned anything in 2020, it should be that public health is not separate and distinct from economic health. “Healthcare” is a meta-market around which $142 trillion in global GDP is linked and flows. 

New Strategy comes from the ability to artfully see and select combinations of capabilities from across a vast assemblage of resources, and then intentionally cohere them on a market-shaping roadmap to achieve desired effects across multiple domains simultaneously and interactively. It’s about creating, managing and leading with an ecological sensibility.

The gap between computation and culture is not just a gulf between different systems of symbolic logic, of representation and meaning: it is also a gap between different modes of imagination. The next healthcare (+ life sciences) will emerge in the zone where human and computational assemblages can do extraordinary things.

 Which is what Amazon already knows how to do better than anyone.

 / jgs

John G. Singer advises business and government on large-scale system change. He is the managing partner of Blue Spoon Consulting, a leader in strategy and innovation at a system level. Blue Spoon was the first to apply design thinking to solve complex market access and integration challenges in the pharmaceutical industry.

Strategic Fit for the Next Healthcare

The Problem to Solve is Market Fragmentation

Originally published as ‘Strategic Fit for the Next Healthcare’ on February 19, 2020

During a briefing by academics at the London School of Economics as the 2008 financial crisis was reaching its climax, Queen Elizabeth II, whose personal fortune was estimated to have fallen by as much as 25 million pounds, asked the question that was on the minds of many of her subjects: "Why did nobody see it coming?"

The response by her advisors at the time was blunt:

Economics could not give useful service to explain the crisis because current economic theory has established that it cannot predict such crises. As John Kay, one of Britain’s leading economists wrote shortly afterwards, "Faced with such a response, a wise sovereign will seek counsel elsewhere.”

Despite $50 billion a year being spent on "services" – an industry subsystem comprised of all the firms that provide consulting on everything from strategy to technology investments to digital transformation and patient engagement software – healthcare in the United States is stuck in a loop in time. Most everyone thinks they are doing the right thing, yet healthcare as a whole has been in “crisis” mode since the Nixon administration, its output (outcomes and quality) not matching input (investment in technology and advice).

Ultimately, and unsurprisingly, we’re getting the same result: a market disfigured from a half century of relying on outmoded concepts and anchors of meaning to shape policy and innovation.

Americans’ life expectancy is lagging other wealthy countries and falling for the first time on record. It’s a weird dynamic all things considered, one that begs a larger question of system vision in much in the same way that Queen Elizabeth asked of her economic advisors during the meltdown in global banking and finance.

The editorial board of the New York Daily News captured the essence of the problem at the end of last year:

“A deep new dive into the data shows a cancer eating away at the nation. Death rates have of late been rising sharply for young and middle-aged Americans, a phenomenon that has now driven down life expectancy for three consecutive years.

This in the wealthiest nation in the history of the world, the global center of medical innovation and a place that spends far more on health care than any other country. This at a time when other wealthy nations are continuing to see their people get healthier and live longer.

The question we must ask in light of the new research published in the Journal of the American Medical Association is a cry: Why?”

Many of today's health system CEOs have proved unwilling or unable to understand the structural shifts in their market, spend the energy to build to new systems of engagement, or shift their operating models in order to fit the needs of consumers accustomed to rapid, high-quality service in other industries (i.e., the kind of ‘consumer-grade experience’ we get from Amazon).

Writing in Modern Healthcare, senior reporter Harris Meyer articulates the pressure on CEOs to find a modern strategy.

Meyer describes how hospitals, pharmaceutical and medical device companies, and other delivery systems must be "transformed in the coming years into very different-looking organizations whose focus is on [collaborative business models] that keep patient populations healthy in the most cost-effective ways. With healthcare changing rapidly, hospital CEO positions turning over at a high rate, and baby boomer senior executives eyeing retirement, hospitals and health systems realize their next leaders will need a different set of experiences and skills to successfully navigate that new world."   

Lest the U.S. health economy suffer from transition failure, innovative strategic leadership needs to work with a new frame of reference and imagination to guide the emergence of a new industry model altogether, one that’s focused on, and rewards, primary prevention and early intervention.

We are in an era that needs a new industrial cortex.

Context Collapse

Systems with high levels of interactive complexity – like banking and health care -- are subject to failures and unintended consequences that seem to come out of nowhere, or that appear unfathomably improbable or impossible to fix. Errors propagate, compounding failures and feedback loops that defy conventional logic and solutions.  

The problem is complexity itself.

The thing missing from the conventional perspective is understanding that pieces matter less than the whole, "things" are secondary to experiences. The new business value to extract from healthcare is not from the discrete use of applications or the latest cool tech pilot, but the way these components can meld together to form a new architecture for managing information and curating continuous health engagement.

The concept of “context collapse” was first used to frame and explain the phenomenon of social media when it began taking shape more than fifteen years ago. Nicholas Carr, writing in his blog Rough Type, explains:

“Young scholars like Danah Boyd and Michael Wesch, building on the work of other sociologists and media theorists, argued that networks like Friendster, MySpace, YouTube, and, later, Facebook and Twitter were dissolving the boundaries between social groups that had long shaped personal relations and identities. 

Before social media, you spoke to different “audiences” — family members, friends, colleagues, and so forth — in different ways. You modulated your tone of voice, your words, your behavior, and even your appearance to suit whatever social “context” you were in (workplace, home, school, nightclub, etc.) and then readjusted the presentation of yourself when you moved into another context. 

On a social network, the theory went, all those different contexts collapsed into a single context. 

Whenever you posted a message or a photograph or a video, it could be seen by your friends, your parents, your coworkers, your bosses, and your teachers, not to mention the amorphous mass known as the general public. And, because the post was recorded, it could be seen by future audiences as well as the immediate one. When people realized they could no longer present versions of themselves geared to different audiences — it was all one audience now — they had to grapple with a new sort of identity crisis. 

The problem is not a lack of context. 

It is context collapse: an infinite number of contexts collapsing upon one another into that single moment of recording. The images, actions, and words captured by the lens at any moment can be transported to anywhere on the planet and preserved (the performer must assume) for all time. The little glass lens becomes the gateway to a black hole sucking all of time and space — virtually all possible contexts —in on itself. The would-be vlogger, now frozen in front of this black hole of contexts, faces a crisis of self-presentation.”

In healthcare, we have effectively killed off the independent sphere: everything is collapsing into one context.

Transformation is Born From a New Narrative

Or to put it another way, the transformational remit for today's health market leaders is the ability to creatively explore and conceptualize a new context for outcomes, quickly assemble the intellectual viewpoint, and then stand-up the new infrastructure -- the nervous system -- to own the space. The only story that matters is the one in which a new system is designed to produce better health.

Outcomes from the new context, not inputs from niche impacts, becomes the axis for competition. Advantage derives from how common sources of information are pieced together and analyzed. You either know things others don’t or interpret what others do in a better way. The shift to make is from data crunching to context crunching.

Which is the role of “digital” in this story.

Its value is almost as a philosophy, more like ‘a digital sixth sense’ comfortable and fluid in the ability to dissolve boundaries, create new context from new aggregations, remove friction and re-configure entire business systems, practically overnight. All market space is fair game, any industry can be repositioned as a commodity in someone else's ecosystem. This is one reason why FedEx is becoming "featurized" by Amazon, California can “think” like a drug company and launch its own prescription-drug label; and why Best Buy gave a 109-slide presentation framing a future for itself in health care that is bigger than in electronics (see: Healthcare May Eventually Become A Bigger Business For Best Buy Than Selling Electronics).

The real disrupters are comfortable searching for landmines with their feet.

Outcomes as a New Axis for Competition

Projections are that designing and managing new models of care that reward outcomes and reduce waste – transitioning an entire economic system from fee-for-service to value-based care -- could lead to $1 trillion of cumulative savings in the United States alone in the coming decade. The challenge is how to conceptualize a new market economy to ensure implementation is sustained at a scale large enough (in terms of money at stake, support given, breadth of providers and patients involved, technology investments and applications) to achieve real impact.

What seems to be missing, in simple terms, is thoughtful action and active thinking to invent a new economic logic. The complex as a whole needs different tools to shape ideas about stakeholder value, investment and productivity. 

The production of health is an infinite game – it’s never just one thing, but many things simultaneously and interactively over an extended period of time (think years, not months). A system organized on the production of health is not the same thing as focusing on lowering cost.

Opportunity for strategic transformation in the coming decade will come not just on improving access, quality, and affordability around discrete events, or promoting the technical merits of a product in isolation from its environment, but also on predictive, preventive, and outcome-based care models and reimbursement strategies that advance social and financial inclusion.

Outcomes as an axis for competition is uncharted space where healthcare + life sciences interact as a closed circuit, one context. It may be better understood as a new market form where action and incentive is directed at continuous health engagement and co-evolution to sustain a new care pathway.

New Strategy then becomes a process of market integration, seeking the highest common denominator for the broadest number of stakeholders to cohere on a new care standard – in other words, finding and then balancing a new relationship between value creation and value extraction.

Said differently, the old narrative no longer holds. In the next healthcare, it’s the story at a system level that becomes the locus for “disruption.” 

/ jgs

John G. Singer advises business and government on market innovation. He is the founder of Blue Spoon Consulting, a leader in Strategy and Innovation at a System Level. Blue Spoon was the first to apply design thinking to solve complex market access and integration challenges in the pharmaceutical industry.

Fear and Loathing in the Doldrums

We are sitting astride a stark rupture in the historical timeline, a wholesale destruction of contexts. It's time for a new category of ideas to enact large-scale system change.

Healthcare's next cycle of evolution links the 'production of health' with economic development as Modern Strategy for "transformation," one that happens on a market-shaping roadmap. It's about assuming Total System Leadership for the 'common good' and working with a new philosophy of value. Outcomes and community impact are the organizing ideas to measure strategic success.

Though the US is the world’s largest economy as measured by GDP, writes David Rotman, editor at large of MIT Technology Review, it is doing poorly on indicators such as environmental performance and access to quality education and health care. That's data from the Social Progress Index, released late this summer by a Washington-based think tank. In the annual ranking (done before the covid pandemic), the US came in 28th, far behind other wealthy countries, including ones with slower GDP growth rates.

“You can churn out all the GDP you want,” says Rebecca Henderson, an economist at Harvard Business School, “but if the suicide rates go up, and the depression rates go up, and the rate of children dying before they’re four goes up, it’s not the kind of society you want to build.” We need to “stop relying totally on GDP,” she says. “It should be just one metric among many.”

Part of the problem, she suggests, is “a failure to imagine that capitalism can be done differently, that it can operate without toasting the planet.”

In her perspective, the US needs to start measuring and valuing growth according to its impact on climate change and access to essential services like health care. “We need self-aware growth,” says Henderson. “Not growth at any cost.” 

"Digital" is a Consensual Hallucination

Tech commoditization means strategy is the differentiator.

Competitive convergence is the hallmark of a $400 billion global healthcare technology industry. The vast assemblage of markets (and marketing) is not just similar, but identical, in outlook and approach selling technical potential as a theory of value.

Because anyone can easily match “mass” and “best technology” capabilities, system entrepreneurship is the new skill for leadership development, strategic imagination and creative approaches to market integration.

"Healthcare is now arguably oversaturated with innovations," say Ryan Vega and Kenneth W. Kizer recently in NEJM Catalyst (see VHA’s Innovation Ecosystem: Operationalizing Innovation in Health Care). "Most have neither produced dramatic improvements in outcomes nor spread at at the pace and scale needed to materially bend the cost curve."

The Main Drift is painfully apparent.

If the jumping-off point for new direction is premised on the technical potential of technology, if we buy the sell that "transformation" and "innovation" and "progress" should be framed in technological terms, the odds are that a $4 trillion health economy in the United States will stay stuck in the same confused haze that has kept the system operating in "crisis" mode for more than 50 years.

Said bigger, the collapse of a $90 trillion global economy tells us more about the foundational fragility of our strategies and strategic thinking than it does about the future of healthcare. It also shows the infinite power of inertia, the incentives buried deep in the bedrock that reward defending the past, which only calcify the legacy model further into the old industrial cortex.

There's a commercial withering from communicating in cliche, a vacuum of new words to foresee differently, that threatens to calcify The Collapse beyond anything the thin and threadbare language of "patient centricity" can handle as novel vision. Any realistic appraisal of the next few years of history and action to reshape the American way of healthcare has to be weighted heavily on the side of outcomes, not the magical wave of "digital," as the orientation for innovation.

A New ‘Center of Gravity’ for Competition

We need to solve for strategic atrophy.

It’s about changing the primary material conditions for creative leadership. It starts with Modern Strategy born from systems thinking, taking a non-fragmentary worldview to create and compete at a system level. This is about making a new combination of elements where the production of health is the organizing idea for competition, a new gravity field around which ‘continuous health engagement’ is the concept shaping sustainable business strategies.

Brian Eno has made an entire career out of turning convention on its head, from his unique studio methods to his invention of ambient music, a form he describes as a rejection of hierarchy in favor of ecological models of existence.

"To [invent] something is to express a belief in how things belong together," the producer behind U2 and Coldplay said in an interview in Pitchfork magazine. "So I’m suggesting a funny mixture of bottom-up and top-down, which is actually what I think nature does. It’s a mixture of will and desire with an understanding of ecology — how complex things mesh together, and how much you can interfere with that." 

For the next health care (+ life sciences), the real driver of innovation won't be lone geniuses working on artificial intelligence and blockchain, but government + industry collaborating to invent structures that turn short-term fixes into inclusive solutions.  It's about sparking generative value, becoming the invisible mind behind the invisible hand designing new economic systems (ecosystems), working with what theoretical biologist Stuart Kaufman called 'autocatalytic sets' as the origin of life. (An autocatalytic set is a collection of molecules and the reactions between them, such that the set as a whole forms a functionally closed and self-sustaining system.)

In 2019, Humana decided to reorganize its operations and create a dedicated business segment focused on the home. “This was done with the intent of allowing us to accelerate toward a broader ambition around the home, specifically related to home-centered care delivery models,” said Susan Diamond, Segment President at Humana, at the Home Health Care News FUTURE conference last month. “When we formed the new segment, what we decided to do was set [previous strategies] aside and really take a fresh look with a much wider aperture. We formed a new opinion about the range of services that we wanted to make available, again, with a sort of home-centric ecosystem of care delivery assets in mind.”

Outcomes, not inputs, is the basis for competition.

This isn't a moral argument about "doing the right thing,” but an understanding that radical forces are changing not just the rules of the game, but the game itself. Advantage goes to whoever is better with strategy at a system level.

It’s the new master storyline to change the subject.

🤘

John G. Singer is Executive Director of Blue Spoon Consulting, a global leader in Strategy and Innovation at a System Level. Blue Spoon was the first to apply systems theory to solve complex market access and integration challenges in the pharmaceutical industry.

Why "Medication Adherence" is a Lunatic Endeavor

"Monty Python and the Holy Grail," which opened yesterday at the Cinema 2, is a marvelously particular kind of lunatic endeavor. 

It's been collectively written by the Python troupe and jointly directed by two of them (Terry Gilliam and Terry Jones) so effectively that I'm beginning to suspect that there really aren't six of them but only one, a fellow with several dozen faces who knows a great deal about trick photography...

...I particularly liked a sequence in which the knights, to gain access to an enemy castle, come up with the idea of building a Trojan rabbit. When Arthur calls retreat, he simply yells: "Run away!"

From The New York Times review, April 28, 1975

-----

Since time immemorial, "medication adherence" has been the Holy Grail, a treasure hunt pursued by every dimension of the now $4 trillion health economy in the United States. And everyone follows the same script, a storyline of cliche and fragmented action that hasn't changed in decades: "Poor adherence to medication contributes to negative health outcomes."

It's dead language onto which #telehealth is the new maybe fix. To wit this lead-in from “Silver Lining to Coronavirus Crisis: Telehealth May Improve Patient Adherence And Persistence” in the June 9 Forbes:

“For decades, poor medication adherence has been recognized as a significant and persistent problem in the healthcare system. Since a report published in 2000 by the U.S. Department of Health and Human Services, numerous studies have shown that up to 50% of patients exhibit varying degrees of non-adherence and non-persistence.

Poor adherence and persistence contribute to negative health outcomes, particularly for patients with chronic illnesses, such as cardiovascular disease, diabetes, HIV, and depression.

Telehealth services can be deployed as a tool to improve medication adherence and persistence.”

Everyone is conjuring from pipe smoke.

The belief in technology as a benevolent, self-healing, autonomous force is seductive and addictive. It allows us to feel optimistic about the future while relieving us of responsibility for that future, explains Nicholas Carr in Rough Type, his blog exploring the intersection of business, technology and culture. Digital is the magical wave all can ride to growth, a surfboard of possibility that leads to ever-greater speeds, compressions, efficiencies.

It particularly suits the interests of those who have become extraordinarily wealthy through the labor-saving, profit-concentrating effects of automated systems and the computers that control them (good news for investors in Teladoc, which is now worth over $12 billion, and Apple, which on June 10 became the first US company to achieve a $1.5 trillion market capitalization).

“But the real sentimental fallacy is the assumption that the new thing is always better suited to our purposes and intentions than the old thing,” Carr writes. “That’s the view of a child, naive and pliable. What makes one tool superior to another has nothing to do with how new it is. What matters is how it enlarges us or diminishes us, how it shapes our experience of nature and culture and one another.”

There are many barriers to medication adherence. Cost, side effects, the challenge of managing multiple prescriptions (polypharmacy), patients’ understanding of their disease, forgetfulness, cultural and belief systems, imperfect drug regimens, patients’ ability to the health care system, cognitive impairments, a reduced sense of urgency due to asymptomatic conditions (“I don’t feel sick – I don’t need the medicine”), etc, etc, etc, etc….

Successful interventions mean reframing competition to center on creating health system value.

It calls for system entrepreneurship, collaboration on shared marketspace that pulls together and integrates a complete set of interactive tools and incentives, according to a research brief on the topic by the New England Healthcare Institute, a nonprofit, health policy institute focused on enabling healthcare innovation. Published in the summer of 2009, it asks the fundamental question:

“Whether poor adherence can and should be addressed as a stand-alone issue, or whether it is best addressed more indirectly by intensifying effort on other health policy reforms?”

The world has a technology problem in the sense that scientific and technological progress has been sputtering for a while. Which sounds weird but underscores the storytelling problem wired into our mental circuitry: the things that need “innovation” are markets and strategies, not technologies and analytics.

We’re at the moment of the Great Fork, and we need to decide:

Are we simply tweaking the edges with #digital to sustain an operating philosophy and form of economics born in the 1930s? Or do we make a hard break from the old storylines and force a rethink with new concepts, channel our energy and invention in a tight stylistic focus and write a new chapter to history?

Navigating the wreckage left behind by the coronavirus pandemic begins with new narratives to invent new pathways. The unmet need is an alternative form of contemplation, a novel way of seeing and describing the world at a system level, without conceptual divisions, because the existing habits of making sense and tacking action aren’t tracking with reality.

Like the Flying Circus who cohered into one ensemble, the infinite and expanding galaxy of pieces that “can” produce health need to cohere as new economic systems.

Until then, “medication adherence” is a Trojan rabbit.

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Originally published in Pharmaboardroom, June 16, 2020

The Coronavirus Sparks a Feedback Loop

"We are learning that hospitals might be the main Covid-19 carriers, as they are rapidly populated by infected patients, facilitating transmission to uninfected patients. Patients are transported by our regional system, which also contributes to spreading the disease as its ambulances and personnel rapidly become vectors. Health workers are asymptomatic carriers or sick without surveillance; some might die."

The insight is from a team of exhausted clinicians from a hospital at the epicenter of the Italian epidemic. Writing yesterday in NEJM Catalyst, they call for a new system vision, a shared point of reference on outcomes outside of the clinical setting as the organizing idea around which to understand and design new solutions:

"Western health care systems have been built around the concept of patient-centered care,” they conclude, “but an epidemic requires a change of perspective toward a concept of community-centered care."

The idea of positioning communities at the center of healthcare is not new or novel; it was first proposed in 1967 at a conference on medical costs organized by then President Lyndon B. Johnson. (More on the need to build a new narrative in healthcare in my article, “Isn’t Healthcare Already Fixed?”.)

“Every community is responsible for well-organized, effectively implemented planning— broad gauged and long-range — to achieve the best possible system for delivering the highest possible quality of healthcare to all its people at the most reasonable cost,” summarized the report’s authors nearly 50 years ago. “Through such planning, local priorities can be set up, duplication of services eliminated, and participation of all socio-economic groups encouraged.”

Except strategic success for community-based health assumes primary care is enabled with the economics to coordinate and sustain the production of health, at scale. They are not. And as hospitals across the country struggle with a surge of coronavirus infection patients, a second crisis is brewing in physicians’ offices, threatening to push the nation’s healthcare system further to the brink.

“Coronavirus Crisis Threatens to Shutter Doctors’ Offices Nationwide”

“Primary care physicians are being leaned on to keep patients out of hospitals, and to make do with limited protective equipment and other supplies. Yet they are seeing steep drop-offs in visits as patients stay away, fearful of getting ill,” writes Noam N. Levey, who covers national healthcare policy out of Washington, D.C., for the Los Angeles Times.

These doctors have seen a big uptick in telehealth visits — a move widely hailed by public health experts — but the fees for these services are sometimes lower. They also perpetuate the same economic orientation in healthcare: fee-for-service.

Nevertheless, there are already signs that the pandemic is taking a toll on an increasing number of the approximately 500,000 primary care physicians in the U.S., including internists, family doctors and pediatricians.

In Enterprise, Ala., a rural community in the state’s south where physicians and nurses rallied after a tornado swept through in 2007, killing nine people, the number of paying patients has dropped 75%, according to Dr. Beverly Jordan, a family doctor there.

“At a time when we are struggling physically and emotionally to treat our communities … it is horrifying that we’re having to consider how we’re going to keep our doors open,” Jordan said. “We are hurting.”

The California Medical Association reported that it is already seeing some practices shutter. Nationwide, widespread closures may be just four to six weeks away, said Shawn Martin, senior vice president of the American Academy of Family Physicians.

Like Driving in New Jersey, You Can’t Get There From Here

So why then are so many primary care practices struggling?

“It’s because of the unremitting stupidity of the current fee-for-service reimbursement system,” says Dave Chase, cofounder of the Health Rosetta. “Rather than paying primary care doctors a robust prospective, risk-adjusted fee per patient to care for a population of patients, the vast majority of health insurance offerings pay only for individual visits or tests (e.g., telehealth). Without patients, primary care practices are like the airlines operating ghost flights (except without the billions of profits the past few years, not to mention the huge federal dollars now flowing to the airlines from the recent Congressional legislation.”

He’s calling for a Primary Care Marshall Plan:

These practices need an immediate infusion of funding to implement a community-wide pandemic response. All insurers (including the 100 million people in self-insured employer plans) should pay primary care physicians / practices an upfront fee to care for patients for the duration of the Covid-19 pandemic, instead of having doctors bill for each service they provide. This would replace the severely flawed, fee-for-service model that has made our country more vulnerable to the pandemic.

In strategy, reacting matters more than planning.

Until we find a new orbit for innovation, a new narrative with new concepts to design a new strategic response, the unfolding system collapse triggered by the coronavirus will force growing numbers of physician practices to lay off staff, or even close their doors. And that’s stoked alarm that even more patients will end up in hospitals.

Feedback loops are powerful things.

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The Design Flaw in a $3.6 Trillion Health Economy

Walter Vasconcelos

Writing on the new world disorder triggered by the coronavirus, Thomas Kaplan, political reporter for The New York Times, sets our focus with language that reinforces the status quo: the payment mechanism.

"The future of America’s health insurance system has already been a huge part of the 2020 presidential campaign," Kaplan writes in his column yesterday, ‘It’s a Leadership Argumen’t’: Coronavirus Reshapes Health Care Fight. "At campaign events over the past year, voters have shared stories of cancer diagnoses, costly medications and crushing medical debt."

Except we’re still flailing in our strategies to reshape the health care fight. The storyline that’s been driving the kinetics and perpetuating the feedback loops behind the hand wringing and crisis — our mental frame —hasn’t changed in more than 50 years. Literally.

In 1967, President Lyndon B. Johnson convened a National Conference on Medical Costs. It brought together more than 300 of the Nation's health leaders, representing both providers and consumers of health services. The membership of the Conference included men and women trained in medicine, dentistry, pharmacy, economics, administration, and in other relevant disciplines. They represented a significant proportion of the men and women in this nation who have studied the rising costs of health care and the effect of these costs on the availability of medical care to all Americans.

In its final report delivered to this country’s executive leadership at the time, the “urgent need for a wide range of actions to deal with the rising costs of medical care” was clearly indicated by the members of the Conference. The projection of problems arising from increasing demands for health manpower, and the need for expanding and strengthening the Nation's supply of health personnel, was the subject of deep discussion and analysis.

“Even the most optimistic estimates of future manpower in the health services indicate chronic shortages for the foreseeable future. Emphasis was placed not only on the need for more physicians, dentists, nurses and other health personnel, but for the development of new and better ways to utilize the available and future supplies.”

Decades before Bernard Tyson, the late chairman and CEO of Kaiser, mainlined the concept that the hospital of the future would be the home, the Conference proposed focusing on “communities” as a path to producing health.

“Every community is responsible for well-organized, effectively implemented planning— broad gauged and long-range — to achieve the best possible system for delivering the highest possible quality of healthcare to all its people at the most reasonable cost,” summarized the report’s authors. “Through such planning, local priorities can be set up, duplication of services eliminated, and participation of all socio-economic groups encouraged.”

Their conclusion, as captured by John Gardner, the Secretary of Health, Education and Welfare at the time:

‘Everyone seems to agree that the existing system— or lack of system—has rather marked shortcomings. But there is not yet any agreement as to what a more perfect system would look like. It seems likely that we will go through a period of experimentation and in true American fashion may end up with several variation in different parts of the country, suiting local preferences and conditions.

Whether the health care system of the future should develop around the hospital as an organizational focus, or around the payment mechanism, or around group-practice plans, or around all of these in some sort of collaboration with State health planning councils— or whether other variants will emerge— is still a wide-open question.

You have listened to a lot of words in the past two days...I think it is fair to say that the discussions have reflected a universal recognition that change is necessary."

We’re still waiting.

The $3.6 trillion system of markets that comprise the U.S. health economy is organized as inputs for niche impacts, not outcomes from a coherent whole. At an individual level, the story is everyone doing the right thing for their businesses, brands and shareholders. At a system level, the story is collapse.

Value extraction for shareholder benefit vs. value creation for stakeholder benefit. Health care needs a new orientation. Reducing cost is not the same frame as producing health.

"The answer to why we’re running out of protective gear involves a very American set of capitalist pathologies,” writes Farhad Manjoo, op-ed columnist for The New York Times. His column this week, “How the World’s Richest Country Ran Out of a 75-Cent Face Mask,” described a uniquely American story about the nature of capitalism consuming our national preparedness and resiliency. “The rise and inevitable lure of low-cost overseas manufacturing, and a strategic failure, at the national level and in the health care industry, to consider seriously the cascading vulnerabilities that flowed from the incentives to reduce costs."

Failure takes time.

The next health care needs to be imagined around outcomes, not the insurance system. And for that, the gospel of innovation needs new words to think new thoughts.

#bigdesign

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Pharma Flailing

MedAdNews is a trade publication covering the business of pharmaceutical marketing. It’s somewhat like Advertising Age, in that it’s focused on serving and celebrating the subsystem of communications agencies and media buyers who create the content to position and promote the feature/benefit story of prescription drug brands directly to consumers and health care professionals.

It’s big business. In 2016 alone, according to the Journal of the American Medical Association, the pharmaceutical industry as a whole invested somewhere around $30 billion on drug advertising, promotion, public relations and sales across audiences and therapeutic categories.

April is always an exciting month at MedAdNews. It’s the issue where most drug advertising agencies get profiled and submit their best “creative” in the hopes of winning a Manny Award. The Manny Awards, says the magazine, “pay tribute to the creative work of agencies serving the healthcare market, their people, and their contributions to the industry.”

The prelude to this year’s edition, beneath the headline “Another Year of Changes, Growth” sets the stage with this odd retrospective:

“In 30 years of the Manny Awards, many things — technology, medicine, and ways agencies do business — have changed. But the healthcare ad industry continues to thrive and adapt to the new demands for relevance and creativity.

Think of where you were 30 years ago. Were you already working in healthcare advertising? Were you still in college or just graduated? Or were you in high school….?

Now think about what the media world was like 30 years ago. Network television was still king. The primary places to advertise were newspapers, magazines and radio, as well as direct mail.

And the internet was not really a thing.”

The gala ceremony announcing the many Manny winners (there are 40 categories) was April 18. Which, as it turns out, coincided with the publication in JAMA of an editorial, “Lowering Cost and Increasing Access to Drugs Without Jeopardizing Innovation.”

The authors of the JAMA editorial are Robert M. Califf, MD, a former FDA Commissioner now at Duke University School of Medicine, and Andrew Slavitt, a former Acting Administrator of the Centers for Medicare and Medicaid Services. They begin their view this way:

“US drug costs have reached unacceptable and unsustainable levels. Evidence shows that “financial toxicity” arising from drug costs and other medical expenses is reducing financial security for many families, and prompting difficult choices, as patients defer or forgo therapies they cannot afford.

In stark contrast, comparable countries negotiate drug prices and use drugs more effectively. Recent data suggest that other high-income countries have an average life expectancy approximately 3 to 5 years longer than that of the United States, which ranks last among high-income countries and is losing ground compared with peer nations. Although drug prices account for only part of these trends, they nevertheless add to disparities that dominate the trajectories of US health outcomes.”

They go on to say:

“Direct-to-consumer advertising, detailing, and excessive physician payments also drive up costs. A particularly troubling issue to health professionals is the increasingly brazen use of the internet, social media, and television for marketing based on marginal or unproven benefits under the protection of current legal interpretation of First Amendment rights.

Which brings us back to one the central points of this blog: $30 billion buys a lot of awareness about disease and drugs. If only it worked to change behavior and deliver tangible business impact. (I’ve written before on “awareness” campaigns as a new category of waste in healthcare. Read more here.)

Another Market Forecast Meets a New Market Reality

Amgen reported earnings yesterday.

Aimovig is its new drug to prevent migraines. Sales were $59 million for the quarter, short of the $83 million projected and down from $95 million in the fourth quarter. As a new class, drugs to prevent migraines were forecast to yield $4 billion in annual sales by 2026 in major global markets.

Amgen cited pricing pressure from payers, and is still giving out 40% of Aimovig prescriptions for free.

The story line for Amgen is following a pattern essentially all of the pharmaceutical majors are experiencing: muted top-line growth bouncing around 2-3 percent (similar, as it happens, to the advertising holding companies Omnicom Group, Interpublic Group, and WPP), and weaker-than-exepcted sales for key drugs fighting for share in hyper-crowded markets. Price competition and profit pressure are the inevitable result, as the pharmaceutical sector tries to create negotiating leverage for insurers.

The implications here are that the technical merits of a new “drug” are table stakes in the market shift to value.

This is why “digital” + drug discovery = status quo: you’re reinforcing the past, and creating with the same mindset from the Industrial Age. The nature of thinking and innovation needs to fit a radically different context for strategy. The aim should be for something qualitatively different, more imaginative strategically, more systemically transformative.

Competing on outcomes begins with a new system vision, one that’s conceptualized concurrently with new science and new evidence. The end state is a “value” story defined and priced by impact at a system level.

More succinctly, there’s a difference between bringing a new drug to market, and bringing a new outcome to market. For the pharmaceutical industry, the should mean more B2B, less DTC.

But then, who wins a Manny?

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Another "Digital Transformation" Goes Off the Rails

The New York Times this week reported on another “digital transformation” going off the rails. This one happened in the $432 billion market for “smart learning and education.”

It involves Summit Learning, a fast-growing, online “personalized learning” platform from Facebook founder Mark Zuckerberg’s philanthropy. Summit Learning is now being used by around 330 schools, 2,450 teachers, and 54,230 students in 40 states and the District of Columbia, Summit claims.

The Silicon Valley-based program promotes an educational approach which uses online tools to customize education. It’s “based on collaborations with nationally acclaimed learning scientists, researchers and academics from institutions including the Harvard Center for Education Policy Research,” Summit’s website says.

Eight months ago, according to the Times, public schools near Wichita, Kansas rolled out Summit Learning. The Times piece sets the stage with this passage:

Many families in the Kansas towns, which have grappled with underfunded public schools and deteriorating test scores, initially embraced the change. Under Summit’s program, students spend much of the day on their laptops and go online for lesson plans and quizzes, which they complete at their own pace. Teachers assist students with the work, hold mentoring sessions and lead special projects. The platform is free to schools. The laptops are typically bought separately.

Then, students started coming home with headaches and hand cramps. Some said they felt more anxious. One child began having a recurrence of seizures. Another asked to bring her dad’s hunting earmuffs to class to block out classmates because work was now done largely alone.

“We’re allowing the computers to teach and the kids all looked like zombies,” said Tyson Koenig, a factory supervisor in McPherson, who visited his son’s fourth-grade class. In October, he pulled the 10-year-old out of the school.

People -- students, students interacting with teachers in a classroom setting -- were not the organizing idea in the Summit narrative; making the learning experience "digital" was. It also appears that input from the students and teachers themselves was not a factor in the experience design. The sunny end state was assumed. So then the roadmap becomes conceptualized around the mechanics of tech functionality and efficiency from life spent online.

Which is what technology wants.

The parallels to what’s unfolding across the $7 trillion system of markets defined as healthcare are uncanny. HCP burnout and administrative burden from electronic health records is now a major theme; patient-provider interaction (the human touch) is a top priority for health consumers; “digital” + drug discovery is reinforcing the status quo; and U.S. healthcare has been in crisis mode for the past 50 years, ranking last among among 11 countries for outcomes, equity and quality.

Burning Down the Schoolhouse

Durable outcomes tend to get lost in the scramble when you’re trying to survive an “education revolution” that’s going to destroy your market TODAY. Technology creates pressure to not be left behind. It sells on the quality of illusion and future vision, of life and living better imagined through the lens of “digital.”

Captured perfectly by Thomas Friedman in his opinion piece, “Revolution Hits the Universities,” in late 2013:

“Nothing has more potential to lift more people out of poverty — by providing them an affordable education to get a job or improve in the job they have. Nothing has more potential to unlock a billion more brains to solve the world’s biggest problems. And nothing has more potential to enable us to reimagine higher education than the massive open online course, or MOOC, platforms that are being developed by the likes of Stanford and the Massachusetts Institute of Technology and companies like Coursera and Udacity.”

Still….

“Home-study programs, whether delivered through mailboxes or TVs, CD-ROMS or websites, have played an important role in expanding access to education and training,” wrote Nicholas Carr in Utopia is Creepy. “But, despite a century of outsized promises, the technologies of distance learning have had little effect on traditional schooling. Colleges, in particular, still look and work pretty much as they always have. Maybe that’s because the right technology hasn’t come along yet. Or maybe it’s because classroom teaching, for all it’s flaws and inefficiencies, has strengths we either don’t grasp or are quick to dismiss.”

Which is the conclusion reached by a Pennsylvania junior high school last week. The school board decided to pull the plug on Summit Learning after less than a year.

“At this point there is declining interest, we couldn’t sustain it with the staff, and our other class sizes are rising,” said District Superintendent Michael Vuckovich. “And we weren’t offering a program with the fidelity it should have had, so I made the recommendation … and we decided to end it.

“This did not fail because of teachers. Not at all. The teachers we have are amazing and we’re proud of the work they do. They put their heart and soul into making it work, but it was a difficult decision and it wasn’t made lightly.”

The move restores all students in the junior high to traditional learning from teachers’ lectures and textbook lessons.

(Massive) Failure Rates from Digitally-Led Visions

The real-world experience that unfolds from going digital reflects the larger story of magic and loss most have when it comes to buying the Silicon Valley line: “platforms” and artificial intelligence will revolutionize and render obsolete everything in its wake.

The digitization of the global economy has had many effects on businesses, markets and global enterprises, but few are more significant than the overwhelming desire to undergo some form of transformation and achieve some sort of technological Eden. Companies and industries are under tremendous, albeit misleading, pressure to undergo this process lest they be left in the past. But digital transformation failure rates have become a major problem: a whopping 84% of companies fail to achieve digital transformation.

That’s close to $1 trillion in waste and investments misaligned or not meeting objectives.

Poor strategy is expensive. Regardless of industry, the essential design point is this: you organize technology around people, not people around technology. Most "digital transformations” get the story backward.

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Overload and Boredom as Points of Innovation in Health Care

"Awareness" campaigns are a new category of waste in health care.

Most of us accept administrative complexity, inefficient workflows, obsolete care standards and ample fraud as root cause for around $1 trillion in waste floating throughout the current system(s).

In a Harvard Business Review piece not long ago, a group of authors spanning government, economics, entrepreneurship and strategy consulting got together “to assess what we already know we can save in our system and where policymakers, entrepreneurs, investors, and health care leaders need to focus their attention.”

They categorized the interventions into the different strategies put forth by various experts and political agendas, and analyzed their total potential savings. They then reviewed four strategies: keeping the current health care system’s trajectory as is; comprehensive demand-side reform; aggressive supply-side reform; and a combination of demand-side and supply-side reform.

They had two key findings:

• The political rhetoric about demand-side versus supply-side as a better option is ill-founded; both have roughly the same effect on total spending.

• Even if the United States implemented all the approaches whose effectiveness has been measured, only 40% of the estimated $1 trillion of wasteful spending would be addressed, leaving a significant opportunity for innovation in all areas of health care.

Naturally, their effort took the existing system as the thing to fix. Energy and attention was focused on finding problems that fit the math, of imbuing stability into traditional economic theory and casting the arc of healthcare in a form that is amenable to mathematical and deductive methods. Missing, of course, was the human dimension.

When Information Turns to Noise

Welcome to April in America.

You’re no doubt aware this is Autism Awareness Month and Foot Health Awareness Month. April also includes Sexually Transmitted Infections Awareness Month, Oral, Head and Neck Cancer Awareness Week, Infant Immunization Week, Hemophilia Day, Women’s Eye Health and Safety Month...

I'm still catching up on all the calls to action from March’s days of awareness.

Too many organizations concentrate on raising awareness about an issue — such as the danger of eating disorders or high blood pressure in African Americans (see here for Humana’s awareness campaign, “More Healthy Days” Barbershop and Beauty Parlor Tour, launched this week to raise awareness of stroke risk and diabetes in African Americans — without knowing how to translate that awareness into action, by getting people to change their behavior or act on their beliefs.

In Stop Raising Awareness Already, Ann Christiano, who holds the Frank Karel Chair in Public Interest Communications at the University of Florida College of Journalism and Communications, and Annie Neimand, a PhD candidate in the University of Florida Department of Sociology, Criminology and Law, write on the need to adopt a more considered approach to designing public health communications that actually change behavior.

Their perspective:

For those working on a cause they care about, the first instinct is often to make sure that as many people as possible are aware of the problem. When we care about an issue or a cause, it’s natural to want others to care as much as we do. Because, we reason, surely if people knew that you’re more likely to die in an accident if you don’t wear a seat belt, they’d wear their seat belt. And if people only knew that using condoms is critical to preventing the spread of disease, then they would use one every time.

That instinct is described by communication theory as the Information Deficit Model. The term was introduced in the 1980s to describe a widely held belief about science communication—that much of the public’s skepticism about science and new technology was rooted, quite simply, in a lack of knowledge. And that if the public only knew more, they would be more likely to embrace scientific information.

That perspective persists, not just in the scientific community but also in the world of nonprofits, marketing, and public relations. Public relations texts frequently cite awareness, attitude, and action objectives. Marketing students learn that awareness precedes action. And many of the foremost public relations and advertising agencies still report results to clients in the form of impressions—the number of people who were exposed to the message.

Do any of these campaigns work?

The data, naturally, is all over the place. There’s certainly no shortage of “awareness” campaigns around the things that either cause, can or should be done to control diabetes and obesity, for example, but worldwide obesity has nearly tripled since 1975, according to WHO. In 2016, more than 1.9 billion adults, 18 years and older, were overweight. Of these over 650 million were obese.

Bad Versus Good Redundancy

Without significance, variety is not the spice of life.

Says sociologist Orrin E. Klapp in Overload and Boredom, Essays on the Quality of Life in the Information Society:

“Bad redundancy is a lack of information which, when degraded, cheats in some way. It filters out some needed parts of a message while repeating too much that is not needed. It fails to serve continuity. It does not reinforce identity. It defeats resonance.”

Reframing: the gospel of healthcare “transformation” needs new words.

Strategy and innovation should happen at a system level, and include a new kind of communications and creativity. Solving for banality and boredom is as elemental to sustain engagement and health outcomes as all things "digital" and cloud.

Alas, though, the allure of the gadgets is hard to resist. We tend to confuse technology for innovation, and healthcare for technology. It’s costing the world (and investors) trillions.

As Jefferson Airplane’s Grace Slick sang in White Rabbit, “logic and proportion have fallen sloppy dead.”

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Healthcare's 'Our Value is to be Valuable' Problem

The gospel of innovation in healthcare needs new words.

A $4 trillion system of markets is stuck in a loop in time, kinetically trapped in “crisis” mode for the past 50 years because the taxonomy used to frame “transformation” and “disruptive” conversations rarely moves past “patients are at the center of everything we do.”

The whole is on autopilot, only this time it’s being guided by the promise of algorithms to deliver the sunny end state: patient empowerment and technology as the future of healthcare. It’s a very functional vision. What seems to be missing, in simple terms, is thoughtful action and active thinking around outcomes as the basis for market strategy.

Which is to say most of the pieces in the economic system defined as healthcare have been working with the same set of ideas to create and compete in the same way: a variation of ‘'my patient centricity is better than your patient centricity’. Ultimately, and unsurprisingly, we’re getting the same result: a “burning platform” from spending about 18 percent of GDP on healthcare.

Except the output doesn’t match the input.

"With health care, we have the best in the world — doctors, hospitals, pharma, you name it — but we also have some of the worst outcomes," Jaime Dimon, CEO of JP Morgan, said in an interview with CNBC at the World Economic Forum in Davos, Switzerland, earlier this year. "Obesity, wellness programs that could work better, the opioid problem, 40 million uninsured. So you know, to me, you look at the whole issue and what should we do about it."

It’s a competitive issue for the United States, Dimon adds, saying "that is a huge impediment to American business over the next 50 years.”

Which makes Defining Value—The Foundation Of Outcomes-Based Risk-Sharing Agreements published in Health Affairs this week a compelling and insightful perspective. The path to health system innovation has almost almost nothing to do with the infinite means and functional capabilities of new technologies added to obsolete operating models, but everything to do with aligning perspectives on shared marketspace.

Outcomes are the keystone concept to converge perspectives.

It’s the story at a system level that becomes the locus for innovation and creativity. It’s about making novel linkages and new combinations to form the “foundational partnerships around which we can help bring the health system—or, at least, our part of it—into alignment,” say the authors (Susan Shiff, Senior Vice President and head of the Center for Observational and Real World (CORE) for Merck; and Curt Medeiros, President of Optum Life Sciences).

“No matter our roles in the health care system, we are all striving for the same result: high-quality, high-value patient care. Yet, in a complex, constantly evolving system with so many players, making value-based care a reality is challenging. New ways of thinking and operating are required to bring a value-based system to fruition.”

Value innovation flows from a different mindset. This has less to do with using “digital” to personalize promotion and push the technical merits of a product in isolation from its environment, than it does mastering and marketing system level change.

“Our work is not remotely close to done,” concluded Medeiros and Shiff. “But we’re closing in on the first—and, perhaps, most important—goal: mutual understanding.”

Which can only come from new words to think new thoughts.

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If the "Primary Endpoint" in Alzheimer's is Outcomes, Think Biogen + Spotify

Biogen joins the long list of pharmaceutical companies that have tried but failed to develop successful treatments for Alzheimer’s.

The decision to stop the trials was based on an interim analysis conducted by an independent monitoring committee. This analysis concluded that the potential new drug, aducanumab, was unlikely to benefit Alzheimer’s patients compared to placebo when the trials completed, Biogen and Eisai said.

“This disappointing news confirms the complexity of treating Alzheimer’s disease and the need to further advance knowledge in neuroscience,” Biogen CEO Michel Vounatsos said in a statement.

As of this writing, Biogen has lost $18 billion in market value, on pace for its worst day since August 2008. The stock is tanking because the drug was expected to be a blockbuster. Expectations had been high for aducanumab as Goldman Sachs analysts had projected at one time that sales of the drug could reach $12 billion.

The news is another body blow to an industry that bounds market strategy only within the context of "drug."

Health happens at a system level. If the primary endpoint in an Alzheimer's study is outcomes -- improving cognition, say, or reducing agitation -- vs. technical merits of drug in isolation from its eviornment (e.g., reduction of amyloid accumulated in the brain), what would a Biogen + Spotify combination look like as a path to new science to get there?

Glen Campbell went public with his Alzheimer's diagnosis and allowed his journey to be documented in the film "I'll Be Me." He died Aug. 8, 2017. “Continuing to engage with music helped him plateau," his wife, Kim Campbell, says. "Music really kept him content. We would use it to soothe him when he got agitated." There is also a published body of evidence that supports the link.

Recombination is the real source of value innovation in healthcare. Everything is a remix.

Government Calling Out the Drug Industry for Being Too Conservative?

On his way out the door, outgoing FDA Commissioner Scott Gottlieb writes a memo issuing a challenge to pharma: be more innovative. More specifically, he calls out the subsystem of CROs and other vendors to design new business models that are compatible with disruptive thinking.

He writes:

Efforts to streamline medical product development based on advancing science can be frustrated by legacy business models that discourage collaboration and data sharing, and the adoption of disruptive technologies that make clinical research more effective. Without a more agile clinical research enterprise capable of testing more therapies or combinations of therapies against an expanding array of targets more efficiently and at lower total cost, important therapeutic opportunities may be delayed or discarded because we can’t afford to run trials needed to validate them.

“Unfortunately, we’ve seen a continued reluctance to adopt innovative approaches,” he noted. New forms of collaboration are part of this story.

New research paradigms are needed to break down barriers between real world data and clinical research, so that evidence can be shared rapidly to improve both domains across a learning health care system. In some cases, the business model adopted by the clinical trial establishment just isn’t compatible with the kind of positive but disruptive changes that certain innovations can enable.

Which only underscores the why for a whole new innovation agenda in healthcare, the kind of systemic vision for transformation framed most recently by Kevin Schulman, Professor of Medicine at Stanford University, and Barak Richman, Professor at Duke Law School, in the New England Journal of Medicine earlier this year: “Toward an Effective Innovation Agenda.”

If you have government asking for disruption from industry, then you know we really have entered a whole new era.

Quoting Hunter S. Thompson: “When the going gets weird, the weird turn pro.”

Recidivism as an Outcomes Measure

Competing on outcomes happens at a system level. Increasingly, it’s becoming a ‘winner-take-all’ game.

In the RFPs for Netflix subscription models to pay for hepatitis C drugs, states of Washington and Louisana are both looking for the winning bid to include support and education for their prison populations.

Which opens space for value innovation in “correctional health care.” This is a subsystem of markets comprised of outsourced, for-profit contracts for about 70 percent of prison care in the United States. The two largest providers of prison health — CorizonHealth and Wellpath — are responsible for the care of about 400,000 people on a day-to-day basis.

Can Gilead Sciences, AbbVie or Merck apply what they know about discharge planning to reduce rates of reincarceration? Can that social impact be used as an outcome measure to differentiate beyond drug price?

PhRMA was once a heroic industry, doing miracles with science. With some strategic imagination, and a re-allocation of resources and mindset, it still can be.

On Innovation Stagnation in Healthcare

Recent techno-enthusiasm aside (e.g., #HIMSS19), we're living in a time of innovation stagnation.

If you step back and take a broad view, nothing much is really "transforming" healthcare’s systemic performance declines. We're distracted by the theater of the latest "useful" feature, but digital + drug discovery = status quo.

Pilotitis dominates and provides cover.

We're funneling our creativity into areas that produce niche impacts. So a tech start-up has a greater prospect of riches if it creates a new social networking app than if it launches a new model for, say, mass transit.

Peter Thiel, co-founder of PayPal, believes the greatest threat to growth in America is a culture that embraces conformity. He says: “I worry that the conformity problem is worse today than it was in the ‘50s. Our culture does not want change; it does not want progress.”

Writing in Health Affairs this month, Alfred B. Engelberg attributes the cause of high drug prices to a shortfall in innovation at a system level. The path forward is a new market where competition is based on outcomes. He says:

“The price of a drug should reflect its value. If a new drug lacks a meaningful clinical advantage it is not entitled to a higher price than the existing medicine. If it does offer a clinical advantage, the value of that advantage can be quantified. Value-based pricing is the core principle employed by other developed countries in negotiating drug prices and is the reason why their per capita drug spending is so much lower.”

Innovation begets disruption, and disruption requires pivoting to a new set of norms and institutional frameworks.

For the pharmaceutical industry -- and the entire subsystem of vendors, services, agencies and advisors who are paid to guide and operationalize its plans -- this means developing a new market positioned on health system value, not technical merits of "drug" in isolation from its environment.

Who Transforms the Transformers?

Continuing a thread on innovation stagnation in healthcare, New England Journal of Medicine today published a call for a whole new approach (“Toward an Effective Innovation Agenda”).

Authors Kevin Schulman of Stanford University School of Medicine and Barak Richman of Duke University School of Law, ask:

• “Why have well-intended efforts to adopt digital technologies had so little systemic impact as compared with those in other industries?”

• “Why have investments in digital technologies largely failed to lead to meaningful improvements along the axes of health care’s quadruple aim?”

Somewhere around $1 trillion is being spent (misspent?) on digital technologies sold with a promise to “optimize” or “disrupt” healthcare, yet outcomes from the system as a whole remain essentially untouched. Care patterns and unsustainable cost trajectories haven’t changed in the past 20 years. We are in the 50th year of an official “crisis.” Around 90 percent of “digital transformations” fail.

We need new words to think new thoughts. Healthcare isn’t technology; technology isn’t innovation.

It’s about the outcomes, stupid.