Hospitals must innovate to survive. Here's how.

The shift to value-based health care will require hospitals and health systems to think outside the box to develop new business models and ways of providing care.

How can hospitals harness the power of innovation as they move into uncharted territory? The Daily Briefing's Hanna Jaquith sat down with Diane Stover-Hopkins—Memorial Hospital of South Bend's Innovation Strategy Consultant and Lancaster General Health System's Vice President of Innovation—to find out.  

Q: The word "innovation" is thrown around a lot in health care these days. What does it mean to you, and why is it so important?

Stover-Hopkins: The bottom line for that question is: Health care is a complex and now volatile industry. The challenges that we must adapt to—ACOs, population health—no one knows exactly how these initiatives are going play out. So what do you do when you can't tell 5,000 hospital or health system staff exactly what they need to know to be successful? You prepare them to be more innovative problem solvers.

For many risk-averse and protocol-driven hospitals, being innovative requires significant cultural change. In health care, we're used to thinking about being better—better patient satisfaction scores, better mortality rates. But with innovation, it's also about bringing new perspective to the table. Put simply, it's not just about being better—it's about being better and different.

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Q: What can hospitals do to foster innovation at their organization?

Stover-Hopkins: Establishing a culture of innovation is by no means one-size-fits-all, but there are some strategies that hospitals can use to ensure success. First, it's important that senior leaders be open and enthusiastic about the process. Memorial Hospital & Health System was one of the first health care systems to have a board-approved R&D policy that set aside 1% of revenues for innovation projects. It really sent the message that they were committed to new ideas and novel solutions.

At Lancaster General Health, system administrators recently formed a new division called Lancaster General Health Innovative Solutions. There are many exciting models hospitals can pursue to build an innovation strategy that aligns with the overall strategic priorities.

There also needs to be a somewhat formalized process—an agreed-upon system, language, and tools so that you avoid becoming a big suggestion box. Instead of just "anything goes," hospitals should identify six or seven big issues, and have an online system in place that asks the tough questions: Would this idea provide value to a patient? Has it been tried before? What makes this truly different? Having clear frameworks in place so that staff can talk themselves out of a mediocre idea is important.

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Be thoughtful about creating a system that gives people the courage to start swinging at ideas and support systems to know which balls to swing at. Also staff members need inspirational space to learn, explore, and prototype in—the typical conference room does not stimulate teams to think differently or collaboratively. It's important that they have access to a private, safe meeting space that allows innovators to gain a fresh perspective and develop great ideas.

Q: So once you've structured the innovation process, where do the great ideas come from?

Stover-Hopkins: Looking outside the health care industry to R&D companies with deep innovation experience is a great way to fast-track culture building. From "inno-visits" with companies like Whirlpool, we've learned really important lessons on how to structure for innovation and create really exceptional experiences for our patients.

Hospitals can also gain from aligning with outside companies to test certain concepts. Memorial Hospital pursued a number of surprising, even odd projects with Walmart, Best Buy, and DuPont. It's a win-win situation: If the idea goes to market, you share revenue and ownership. If it doesn't go to market, you have great new relationships for future projects and your team walks away smarter.

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