June 22, 2022
By Vignesh Chandramouli, Oak HC/FT
For years, automation has been a key driver of transformation across industries, changing the way companies and entire sectors operate. However, healthcare, a $4.1 trillion industry, has fallen behind.
For an industry that constantly innovates, evolves and adapts, the reticence to embrace automation is frustrating, but ultimately, unsurprising. Healthcare remains in a constant tug-of-war among patients, payers, providers and pharma. This push and pull drives unnecessary costs, impacts clinical quality and leads to patient and provider dissatisfaction.
We cannot solely lay the blame on regulations. In other highly regulated industries such as financial services, automation has redefined high-friction processes. For example, automation transformed mortgage underwriting by providing consumers, brokers and banks with relevant information, rules and real-time transactions. As incumbent banks embraced startups, investors leaned into novel ways to reduce friction and improve accuracy, increasing annual mortgage origination by nearly 40% compared to the last decade.
There’s immense opportunity for similar gains in healthcare, but long-term success requires healthcare incumbents to truly commit to automation.
The ongoing COVID-19 pandemic has exposed significant cracks in our healthcare system. As healthcare systems and payer executives contend with ballooning labor costs tied to The Great Resignation and reduction in patient mindshare from the explosion of digital-native startups, they will need automation to stay competitive.
Automation is the key to a more resilient and efficient healthcare system, but increasing meaningful adoption remains challenging. Entrepreneurs trying to navigate these waters should consider the following go-to-market tactics to increase their odds of success:
Focus narrowly on a specific “starter” problem
Even if your platform can do multiple things, you should focus on helping “onboard” prospective customers with one thing you do really well that has short go-live times, minimal customer resource requirements and clear success metrics.
Clearly define success across measurable metrics
ROI is often both qualitative and quantitative in nature, so it’s important to define the framework for your offering and weight KPIs differently based on prospective customer nuances instead of creating bespoke ROI frameworks that are impossible to keep track of.
Deliver 1x-2x ROI within a year of launch
Having clearly defined success metrics should enable automation platforms to demonstrate value within six to 12 months of launch. Ideally, companies should target 1x-2x ROI for the initial deployment to avoid underpricing. Showing ROI within a budget cycle will position companies well for future expansion.
Target the right “champion” to avoid sales cycle slowdowns
C-level sponsorship in healthcare is great, but getting time on their calendars can be difficult. Further, C-level executives often hand off projects to their equally busy lieutenants, who need to be “sold” again to prioritize a project they inherited. Start with VPs and directors that are close to the problem and can deploy quickly.
Approach your customer as a partner, not a vendor
Healthcare has long been serviced by experienced consultants, so take a consultative approach to understanding your customer and educating them on how to obtain results rather than simply how to use your platform. That said, avoid the never-ending track of customization — it’s easy to lose track of the forest for the trees.
Understand your users and delight them
Design to your users’ needs. In healthcare, decision-makers and users often are two different sets of entities. While decision-makers sign the initial checks, users and their adoption determine the path forward.
Embrace more humans-in-the-loop, less AI
True AI in healthcare can be a game-changer. However, we’re still in the first innings and simply need basic “intelligence” to address the repetitive tasks that lead to employee burnout. RPA companies like UIPath and Automation Anywhere have charted their paths to success by positioning their automations as enablers that run in parallel to humans rather than as human replacements, and healthcare platforms should do the same.
In healthcare, the latest and greatest technology is not always the winning formula. Often, companies over-engineer features before making sure their automation drives consistent results. Consistency leads to trust, which is key to displacing incumbents and the status quo.
Revenue is king
Articulate a path to increasing revenue, not just reducing costs. Healthcare remains resistant to headcount reduction, so savings don’t always translate to long-term contract growth. Revenue lift is a much easier sell — just think of how important a value-driver risk-adjustment is for payers and the ability to increase revenue with the same number of members.
There are complexities in healthcare that no other sector faces. Changes to the status quo often impact multiple stakeholders and each stakeholder’s incentives need to be considered.
For one, incentives are misaligned more often than not. Each stakeholder — payer, provider, employer, pharma or patient — is looking to protect their earnings and changes shift dollars from one party to the other. As such, changes to the status quo need to be accompanied by measurable wins for each stakeholder involved.
One good example of realigning incentives with automation is value-based care enablement in primary care. In the last five years, we’ve witnessed the rapid growth of value-based primary care platforms like VillageMD, Oak Street Health and Agilon Health.
These can be considered automation 1.0 platforms that deployed practical human in-the-loop automations to help primary care physicians (“PCPs”) shift from purely volume-based care (i.e., fee-for-service) to managing total cost of care across a population. In effect, these platforms augmented PCPs with technology and workflows to reduce mundane administrative tasks and increase time with patients.
Unsurprisingly, allowing clinicians to focus on patients over admin tasks reduces adverse patient events (that lead to expensive trips to the ED) and reduces total cost of care. As tangible, consistent value has been proven, resistance across the ecosystem toward value-based enablement of PCPs has faded.
Regulatory changes at the federal (CMS) and state level (Medicaid) also create significant complexities. For example, the Affordable Care Act (ACA) and HITECH jump-started a decade of change by incentivizing the adoption of EHRs (now nearly ubiquitous at over 90% adoption).
However, the amount of friction created by prolonged implementation cycles, lack of adequate clinician involvement in decision-making and difficult to measure ROI has left us with a healthcare system skeptical of technology. The reality is that despite digitizing medical records with EMRs, we still cannot share data freely across healthcare systems or allow patients access to or control of their medical information.
Fortunately, we have solutions that focus on reducing friction by acting as the translation layer, allowing different systems to talk to one another seamlessly. These companies solve bottlenecks in the healthcare system from human-reliant workflows and often start with a narrow problem set to gain customer trust.
So how do we get the boulder up and over the hill? There is immense potential and need for capital in order for automation to become ubiquitous in healthcare. Many companies are already bringing creative solutions to the market to automate to legacy workflows, and investors have the power to drive them forward.
Some of the game-changing technologies that startups are taking from inception to reality include:
The healthcare system is complex and multifaceted, but the one thing that is certain is automation is the future. That said, we have a responsibility to propel innovation while continuing to protect all participants.
The public and private sectors must double down on efforts to bring new ideas and technologies associated with automation to fruition. Innovation, infusion of capital and operational expertise from venture and private investment institutions are key factors in bringing these solutions to payers, providers and patients.
It’s time to seize the opportunity to build a better, more efficient healthcare system.
This article originally appeared in TechCrunch.