Business Models in HealthcareJanuary 22, 2021
The days of classic business operations in which a company had a fixed product portfolio, did not look back at the product after it was sold, and worked alone as a loner on innovative developments for its own portfolio, are definitely over. The service aspect is increasingly coming to the fore in business operations, as evidenced by the servitization trend in all kinds of market sectors. This means that the wishes of the customer play an ever greater role in the product development of companies.
In the field of healthcare, too, patient-driven innovations are already an integral part of society. Some innovative technologies are already firmly entrenched in healthcare. The development of a personalized treatment plan is also starting to take hold. Not only in the treatment of diseases, but also for example for the fitting of a customized prosthesis(1) or the analysis of movement with a prosthesis by means of motion capture systems(2)
CHANGING VIEW OF BUSINESS MODELS IN HEALTHCARE
The Netherlands, especially when compared to the rest of the world, leads the way as a country where the health insurance system is unique. This also gives everyone the right to apply for care. However, a changing outlook has prompted a number of progressive parties in the market to evaluate whether the current policy can or should be changed. The view of purchasing models is also changing in the health insurance world. Hospitals normally purchase a fixed annual amount, based on the number of treatments. This total amount is almost always fixed, only the type of treatment can be changed.
Hospitals, on the other hand, must also meet the growing demand for care without sacrificing quality or losing sight of affordability. One way to do this is to abandon the existing purchasing model and opt for intensive cooperation with suppliers who offer a total modular system. B. Braun, a well-known name in the medical world and supplier of medical devices, for example, has experienced that intensive partnership ensures security, cost reduction and burden reduction. They go further than just supplying hospital-wide resources by also entering into dialogue and thinking along with hospitals.
HOW DO YOU CHECK IF YOUR BUSINESS MODEL IS STILL UP TO DATE?
Existing business models have evolved from past considerations and successes. These have sufficed so far, but in a changing world where innovative technologies are succeeding each other at an increasing rate, it is good to take a look at the construction of your own business model. Regardless of whether you are a start-up, scale-up or established company.
It is difficult to predict in advance how and what innovative product idea will be successful. What certainly helps is to take a good look at the target audience you are targeting and how you are reaching them. Then ask yourself the following questions: Do you create enough added value for this group of users? Is the effort and investment you put into it getting enough out of it?
An often made mistake is that entrepreneurs in their enthusiasm do not look closely at how a healthcare innovation connects to a patient group. As a result, the innovative product is often a fantastic product, but not for the target group it was initially intended for. Illustrative of this are health apps and fit-watches, which track activities while also encouraging exercise.
These products are now used by a mostly sporty and more active group of people, whereas the target group was initially some older and immobile people with the intention of literally moving them to more activity. This target group was thus missed, but did catch on with another target group, where it does provide a stimulation of activity.
The important conclusion from this is therefore that as soon as an important party gets involved in this discussion (a doctor or the government), more people start using new innovations. Although this stimulates use, the parallel with medication users’ compliance can also be made: there will always be users who drop out halfway through or who are not motivated by their use after all. It is therefore also certainly important to have an answer to this as an innovative developer of a healthcare innovation.
CONCLUSION: WHAT DOES IT TAKE TO MAKE THIS HAPPEN?
Older business models may still be able to withstand the technological innovations that are taking place. But in the changing world of healthcare, where medical-technical developments follow each other in rapid succession, it can’t hurt to evaluate whether your model (still) matches your target group and whether it is future-proof.
The most important thing is to carefully examine whether the patient is sufficiently central to the development, in terms of quality, accessibility and affordability. This will help determine whether the care innovation is able to create sufficient value (health gain) in relation to the care costs that are being paid.
After all, excessive cost cutting also paralyzes innovative developments in this area. And that certainly doesn’t help the goal we’re striving for. Because in the end, what we are all doing it for, is that thanks to the optimal division of tasks in clinics and hospitals, the patient can count on qualitative and personalized care.
However, new insights do call for a culture change. Hospitals, clinics, health insurers but also companies and especially the government must be open to cooperate with each other and to improve their internal processes. The consumer has a rather guiding and demanding role in this and considerable influence on this process and on the government that should form the new policy.