Wednesday, June 19, 2013

Affordable, Quality Health Care Through Disruptive Innovations

It doesn’t appear that government intervention will solve the issue of providing affordable health care. Indeed, Medicare coverage is likely to diminish at a time health care cost is increasing. Further, it appears the efforts to cover the uninsured will only increase the overall health care costs. Nor does it appear that advances in technology and medicine are providing health care that is more affordable.

The medical community continues to march forward in its ability to cure the most deadly diseases and rebuild the most broken human bodies. For individuals to benefit from the advances in drugs, surgical techniques and other medical advances requires a good deal of money or the very best insurance (also a good deal of money).

 There is a chance that new entrants in the health care market space will find ways to reduce costs and provide quality health care. These entrants will likely be disruptive innovators and enter the market by serving the least profitable health care consumers.

According to the theories on disruptive innovations, new market entrants known as disruptors, find ways to profitably serve markets where industry leaders can’t make a profit.

In the health care industry, profit is least likely to be made when the customers are uninsured and poor. The most profitable customers are those that have insurance, can afford insurance deductibles, and the ability to cover costs when they are not covered by insurance.

If a disruptor were to enter the health care market and focus on the least profitable medical customer, the industry leaders would likely not compete for that group of customers. Even if the industry wanted to find a way to serve the least profitable customers, they would find it difficult to change from the business model focused on delivering high profit margins. This has been validated in the past and discussed in length in +Clayton Christensen’s books and articles.

In the U.S. we are seeing some health care disruptors such as clinics at retail outlets and drug stores. These are less expensive and not as time consuming as visits to doctor’s offices. This is a step in the right direction but not a disruptor that would address the high cost of hospitals, insurance and specialized medical care.

Finding markets that will be large enough to stimulate real change are not likely to be in the U.S. or countries with highly developed economies. This is due to an unyielding medical infrastructure that is supported by both consumers and government. The move to quality, affordable health care in these countries will require changes in business structures that are profitable and benefit large segments of the population and changes in government support systems that are valued highly by large segments of the population. These changes will be met with great inertia.

What Markets Will Stimulate the Disruptive Innovations for Health Care?

Developing nations that have limited medical facilities, a scarcity of top tier physicians and limited government funds for health care will likely be the driving force to serve the planet’s least profitable health care customers.

There are some countries in South and Central America that are attracting U.S. companies to provide expertise in building their health care industry. What the U.S. companies are discovering is that:
1)   The countries do not have the funds to build U.S. style facilities,
2)    Many of those countries’ best doctors have moved to countries where they can earn more money,
3)    The population is unfamiliar with preventive medical techniques and
4)    The government’s ability to support health care programs is limited by a weak or stagnant economy.

For the health care industry to profitably serve patients in these countries will require:
1)   A larger population base being served by a smaller number of physicians. This will likely require smaller clinics located throughout the country that are manned by nurse practitioners and connected to larger “hub” hospitals by telemedicine technologies,
2)   The development of telemedicine technologies that provide accurate analysis and treatment when used by minimally trained staff or private citizens,
3)   Continued development of low cost telemedicine that will allow physicians at “hub” hospitals to perform procedures at outlying clinics,
4)   Programs to train personnel to serve in outlying clinics,
5)   Regular educational programs focused on preventative medical procedures,
6)   Insurance programs focusing on providing coverage for major medical procedures and providing incentives for participation in preventative medical programs.

While these approaches will make a big difference in undeveloped countries they can be adopted quickly by the developed economies of the world.

In the developed countries the focus will need to be on poorer communities. These are usually located in urban areas and consist of groups of economically disadvantaged individuals.

Successfully changing health care costs in developed nations can be accomplished by building programs for the poorer communities such as establishing clinics tied to hospitals and the introduction of telemedicine to serve those populations through the community based clinics without increasing medical personnel. The approaches outlined for developing nations might be a good start for developing a health care system in the developed countries that can profitably serve the poor and uninsured in some of their communities. The overall result will be the spread of affordable, quality health care to everyone.

Thursday, June 13, 2013

Deciding on an Organizational Structure for a New Business

One of my earlier blog posts discussed the steps in setting up a new business. The first step was to identify the job to be done for the customer. The steps following were very straightforward and methodical. You can read this post at

I have recently been involved in two start-ups that may prove as useful examples for a less structured, more evolutionary approach.

The first is a collaboration between Rice University, MD Anderson Cancer Center and the National Space Biomedical Research Institute. The job to be done is to create and commercialize devices for delivery of health care at a distance. The focus is on cancer prevention and care. The organization is known as the eHealth Research Institute.

As it turns out, the steps following the identification of the job to be done and the development of a vision statement may be more evolutionary than taking clearly identified methodical steps.  For example, in a recent planning session, we were considering the various organizational structures that might be adopted. The best structure would be one that allowed continued support from the founding institutions while allowing the ability to attract public and private funding for the new organization.

While the approach follows my recommended approach it differs in the ability to easily identify a clear strategic plan. The reason is the potential for environmental change. The potential for change in funding from the current public and private sources has to be considered as well as the potential for change in focus for the founding institutions.

We believe the new devices that will be created for commercialization by the eHealth Research Institute have the ability to change health care delivery worldwide. To be successful, we will have to have a means of attracting the best projects into the institute that can be moved to the prototype stage then we will have to find funding to support research while the projects are being moved to the final stages of development. We will have to rely on grants and philanthropic funding for the initial stages of the projects then we will have to create partnerships with venture capitalists, private investors and corporations to move the devices from prototype stages to commercialization.

This organizational process will have to be evolutionary in nature. There are examples we can draw upon for guidance but this organization will be different enough from others that it will require innovation and the ability to adapt to a changing environment.  A list of activities to be accomplished will be necessary to develop the organization but rather than each step leading to a clearly definable next step, it will likely lead to a series of options that will require some research before making a choice. It may be that the organization will be different than that which we envision today.

Another example is a consulting venture that I am participating in. In this case, it is pretty clear that our firm will be consulting on infrastructure development in a Central American country. This will be the first such project for our consulting firm and will be the foundation for similar projects in other countries. We believe we are the preferred vendor because our expertise in this area is second to none.

The challenge here is developing an organization that that can grow very rapidly and maintain the quality of service. The good news is that we have access to a large pool of qualified experts ad we are very good at identifying what must be done to successfully complete each project.

In this case we initially proposed on working on one project but we have been asked to provide guidance on all similar type projects. This was a growth in the potential size of the project and it comes at a time when another country is considering our services for a similar type of engagement.

Here the potential organizational solutions will not be easily identifiable but will rather look like a decision tree, each branch offering a different probability of success or outcome.

In both examples the development of the organization is evolutionary in nature and the outcomes cannot be easily predicted. This makes planning, financial and otherwise, more difficult.

To remove some of the ambiguity it is best not to engage in long term planning. It is probably better to identify the next decision point and plan to successfully operate through that decision.

For example, with the eHealth Research Institute if we can identify a means of raising enough financial support to move us forward on identifying and attracting 4 to 5 projects for development without finalizing the ultimate organizational structure then we have a short term win and the ability to better study the next organizational decision. We have identified one research organization that has been successful that took six years before reaching its current organization structure.

For the consulting firm, the organizational structure will develop based on the types of demands placed on the organization. Strategic alliances may be critical for success in the short run then economics or other criteria may require developing a larger internal staff.

Thursday, June 6, 2013

Asking the Right Questions Can Mean The Difference Between Success and Failure

Often there is such a focus on running a business, closing a deal or reaching an objective that attention is given to immediate outcomes. The result of this sort of intense focus may cause a manager to miss important cues that affect the bigger picture.

I have a friend that has been very successful in the business world. He and I have started several businesses together and enjoyed some success. I have learned however to not only listen to his words but to try to understand the true nature of his intentions.  I have learned for example that when he is asked to participate in a business venture and he acts very interested and responds to the request for participation by saying “Let me study this” or “We’ll see”, he means “No”.

This may be a desire to be pleasant and courteous rather than giving a clear answer. I find this to be true in many business encounters. I have been in countless sales calls where the potential client gave what could be considered buying signals and asked for more information to help in the decision making process. I have seen good sales people put a very high probability that the sale would close based on this kind of customer feedback.

This can result in overly optimistic sales projections, which can have all sorts of negative consequences for an organization.

Unfortunately this unclear communication style can be used in other ways. For example, one business associate said that he was approached by one of the world’s largest manufacturers of a new electrical product to be their distributor in the U.S. This indeed seemed like a real opportunity.

The associate was very successful and had a good reputation but was not in the electrical product business. I began to wonder why such a large manufacturer would approach someone not experienced in electrical products to open such an important market. Since my friend had asked me to join with him in this venture, I asked, “Why would the manufacturer choose us when they have access to virtually anyone in the world?” His response was that it really wasn’t the manufacturer that wanted us as partners but a broker representing the manufacturer wanting to open a new market. Clearly still an opportunity but not anywhere near the scale that I thought was initially being offered.

We have all been in situations like those described here and you begin to wonder if there is a way to get to the real meaning of a communication. I believe there is. It really focuses on stepping back and looking at the bigger picture and asking questions that might be appropriate. In the case of the electrical product manufacturer, it was appropriate to look at the bigger picture and wonder why such a large manufacturer would choose an inexperienced group to represent their products.

In the case of a seemingly positive sales call, when a potential customer seems to elicit strong buying signals but asks for more information, it might be appropriate to ask, “Will this information be sufficient to help you make a decision?” or “I can have that information to you by tomorrow. When will you be ready to move forward?”

This might seem a little forward and perhaps even risky but in most cases it will identify areas that need to be covered in order to close a sale.

Questions can also turn a seemingly negative situation into one with a positive outcome. In one instance, a retail customer canceled an advertising contract with my company. The contract was for producing a weekly sales brochure. I asked why he would want to cancel the contract and the customer said “It doesn’t fit our image”. I asked, “What about the product doesn’t fit your image?” and he said,  “Well we are an upscale retailer.”  It occurred to me that the brochure was printed on quality paper but was primarily in black and white. I asked, “If we were able to provide a similar product in full color would it fit your image?” He responded, “ We would buy immediately.” Thus we went from a lost contract to a larger contract in the course of a few questions.

Today I am working on a proposal for a very large project that will engage our consulting firm for several years. The proposal is for a Central American government wishing to build new infrastructure components. We have met with the highest-level government officials as well as those responsible for managing the infrastructure projects. Everyone has assured us that we have the best expertise of any suitors and that we are preferred. In the meetings we were asked to submit a proposal in the shortest possible time so the government can begin moving forward with the proposed projects.

After the visits to Central America, we returned home and began thinking about the project. In the meantime one of our team members had a conversation with an individual in the government there who suggested we submit two proposals. One proposal would be for an individual project and one for guidance to be provided for all infrastructure upgrades.

This all sounds very positive at this point but also brings some questions to the forefront such as; “What should be different in the two proposals since we will be offering the same type of guidance in both instances?” or “Why two proposals?”

The answers to these questions will either limit or expand our opportunities in this country.

Asking the right question may seem like a trivial exercise but let me end with perhaps the most powerful example. I was visiting with a friend who is an oncologist at a prestigious cancer institute. She is most concerned with eliminating cervical cancer. This is an easily identifiable cancer and can be prevented by simply having an HPV vaccine administered to children from 9 to 12 years of age.

The HPV virus causes cervical cancer and Hepatitis B. Hepatitis B affects the entire population which suggests that the vaccine should be administered to males and females. Since the HPV virus is sexually transmitted the vaccine must be administered when the immune system is naïve or unexposed to the virus. Thus the vaccine must be administered before individuals become sexually active.

This vaccine is well publicized and in the U.S. is highly controversial because HPV is a sexually transmitted disease.  Use of the HPV vaccine has found vehement opposition from religious and political groups based on the sexual nature of the disease.

My friend calls the HPV vaccine problem the biggest marketing blunder of all time. She maintains that if it had been introduced as a cancer prevention drug only, it would have been adopted and a lot of lives could have been saved. She wonders why the drug companies didn’t ask the question,  “What is the biggest negative reaction to the introduction of this vaccine likely to be?”

My friend tells me that in today’s society that introduction to the HPV virus is inevitable and that if you want to prevent the disease get the vaccine. Mentioning sex or sexually transmitted diseases is only counter productive and opposition to the vaccine might have been avoided if someone asked the right question.

Sunday, June 2, 2013

MD Anderson, Rice University and NSBRI Collaborate to create New Devices for Telemedicine

I was invited to help with this project about a year ago. Dr. Robert Satcher a surgeon at MD Anderson and former astronaut spearheaded the project along with Jan Odegard of Rice University and Sharon Pepper of MD Anderson. After a year this project has come together.

This is an opportunity for the creation of new devices to deliver healthcare and provide healthcare for populations that are currently underserved.

Houston, we have an opportunity.

The electronic Health Research Institute (eHRI) was created by formal agreement on April 11, 2013 as a research collaborative between the University of Texas MD Anderson Cancer Center, the Ken Kennedy Institute for Information Technology at Rice University, and the Center for Space Medicine at Baylor College of Medicine.
The aim of the eHRI is to be a catalyst for the advancement, integration, translation and acceleration of research and technology to support and enable distance delivery of healthcare, with an emphasis on cancer care.
The eHRI will achieve this by working closely with researchers across the Texas Medical Center (TMC) building technology communities and developing an innovation pipeline while forging partnerships with the local healthcare entrepreneurial community.


To be a world leader focused on advancement, integration and translation of technology research to distance delivery of healthcare services.


To bring researchers together from Medicine, Information Technology, and Industry, to innovate and commercialize devices, strategies, and applications for distance delivery of healthcare, with a focus on cancer care. 

Why eHealth?

The use of information and communication technology to support delivery of digital healthcare services at a distance, while not a new concept, is rapidly coming of age. The number one cause of death worldwide has become cancer, which recently surpassed cardiovascular and infectious diseases.  The specialized care that is required for cancer treatment is concentrated in developed countries.  Fortunately, technology provides a mechanism for both disseminating care to developing countries, and optimizing care delivery in developed countries.  However, the use of information and communication technology in cancer care is currently limited and novel as a concept.  The development and innovation needed to create devices and strategies for tele-cancer care has been hampered by the fact that it requires bringing together expertise from disciplines that are normally not collaborators.  The eHealth Research Institute will provide this mechanism, by funding collaborations between Cancer researchers, Information Technology faculty, and Industrial partners. 
The broad concept of healthcare at a distance has tremendous potential from a clinical perspective. The opportunities range from the simple use of information and communication technology to monitor patients’ daily regimen and compliance with treatment to a developed platform that can deliver the full spectrum of healthcare services in the home, in the clinic, and in the hospital, thereby eliminating patient travel to a distant or remote facility or transporting experts to the patient’s location.
The eHealth Research Institute, using information and communication technology as the enabler, will draw interested partners together to form a new innovation hub focused on technology integration and technology transfer targeting creation of new ventures. From an industry perspective, the potential for product innovation, development and adoption is tremendous.  eHealth holds the key to successfully moving to a patient centric healthcare solution.

Why Houston?

The proposed research institution will help bring together physicians, engineering and science researchers, and industry innovators in a unique alliance that has no equal in the U.S.  Houston and the Texas Medical Center are uniquely positioned to be the home of the eHealth Research Institute being pioneered at the intersection of Houston’s greatest strengths and known expertise: medicine, information technology, space and energy. The eHRI will be housed in the heart of Texas Medical Center, the largest medical complex in the world that is comprised of world renowned and highly regarded medical and research institutions.  The principle partners eHRI include world leaders in their respective fields:  MD Anderson Cancer Center, Rice University, and the Center for Space Medicine.  Other affiliates include the National Space Biomedical Research Institute, The University of Houston, and Baylor College of Medicine. 
Why Now?
The time is ripe for leveraging the strengths in Houston and of the Texas Medical Center to take advantage of what has been identified as unrealized potential. The newly formed multi-dimensional partnerships will not only be beneficial to their institutional members, to the health care sector and the individuals they serve, but also will provide a new business base to the region that will draw attention and greater collaboration from interested leaders in related fields from all over the world.

Projects Areas

·      Continuum of patient care and physician support
·      Patient, public, and physician education
·      Physician training, care, coordination
·      Remote location communication
·      Assistance with prototyping, testing, diagnosis, monitoring, imaging analysis, follow-up care, surgical mentoring
·      Teleconferencing
·      Agnostic, scalable, plug and play device for remote telehealth data-streaming in resource depleted areas
·      Devices for continuous, self-powered monitoring of patient that can be remotely accessed
·      Remote cervical cancer test, analysis and diagnosis

Immediate projects to be developed

Cervical cancer screening: The goal of this project (Dr. Kathleen Schmeler) is to devise remote monitoring devices for cervical cancer screening that are automated, low cost, and deployable to remote locations. These devices should be interfaced with mobile technology, such as a cell phone, so that the information is transmittable from anywhere there is a cellular network.

Melanoma screening: The goal of this project is to develop remote monitoring devices for melanoma screening. These devices will interface with mobile phones to capture and transmit skin photographs that can be analyzed in order to diagnose melanoma in its earliest stages, when it can be treated most successfully. Principle investigators for the project are at Rice University (Prof. Ashu Sabharwal) and MD Anderson (Prof. Jeff Gershenwald).

Digital Pathology: The Digital Pathology project seeks to devise and optimize a strategy for providing pathology expertise to statewide, national, and international clients. The goal is to provide a method for digitizing slides that is affordable and automated, and provides the necessary quality for accurate diagnosis. Several systems that have been previously considered were not scalable for national and international use. Another challenge is to automate the quality assurance. The future direction of the project is to automate the interpretation and diagnosis of digital slides, using a smart computer (such as Watson from IBM).

Microrobotics: Robotic surgery as currently practiced has a been applied at macroscopic scales. The use of robotics has expanded to various subspecialties including urology, head and neck surgery, plastic surgery, neurosurgery, general surgery, and gynecology. Future directions, for which this project is focus, is in miniaturizing the robotics so that it can be applied to finer surgical techniques such as vascular and nerve repair. The goal of this project is to develop microrobotic systems for microsurgical tasks. Dr. Selber has been working with industrial partners to develop potential applications.

Robotic and telementoring applications: Chris Holsinger of Head and Neck Surgery has been using robotic and telementoring applications to extend expertise to underserved locations. The goal of this project is to optimize the usage to telementoring and telerobotic surgery for Head and Neck applications. For telementoring, he hopes to identify the optimal system that allows for comprehensive interaction between surgeons, and provides for an accurate understanding of the 3 dimensional structure and dynamics of the surgical field and site. For telerobotic surgery, the goal is to develop systems for specific application in Head and Neck cases.

Computer assisted surgery in orthopaedic oncology: Dr. Satcher is collaborating with Dr. Justin Bird for Orthopaedic Surgery, and Dr. Skoracki from Plastic Surgery, to develop a computer assisted robotic system for tumor resection and bone reconstruction. Adding robotics will potentially improve accuracy and precision in resecting tumors from hard tissues, such as bone. Additional potential benefits are with reconstructions, which often require shaping allograft bone accurately to interface with native bone. We will work with industrial partners to prototype potential systems for these applications.

Future Plans

·      Identify strategic partners and advisors
·      Identify faculty members and begin research collaboration
·      Develop organizational structure
·      Fundraising
The time is ripe for leveraging the strengths of the highly developed ecosystem of the Texas Medical Center to take advantage of unrealized potential that will not only be beneficial to its institutional members, to the health care sector and ultimately the individuals they serve, but also will provide a new business base to the region that will draw attention and greater collaboration from interested leaders in related fields from all over the world.