I was astounded when I read that 97% of health systems that have Chief Innovation Officer positions had positive operating margins in 2019. While I understand that correlation is not causation, in an industry where margins are eroding, this is a noteworthy connection. Chief innovation officers are tasked with redesigning the delivery of healthcare — guiding healthcare organizations as they shift with technology, market forces, patients and regulation. They own the role of transformation within health systems, rethinking solutions to emerging business problems and developing ideas that drive progress and differentiation.
Owning innovation can be a difficult undertaking in any organization; difficult is the baseline in healthcare where there is heavy regulation, legacy systems, numerous stakeholders and time-tested processes that seem to be set in stone. Despite this challenge, innovation officers are becoming common and are thriving, especially within larger health systems. Reading through profiles and quotes of top Chief Innovation Officers (here, here, here), two things are clear:
- Although they own the title of “Innovation Officer,” they recognize that the entire organization needs to “own” innovation. A CINO might be a guiding force, but in the most successful organizations, innovation is baked into the culture.
- The core mission of any health system is to serve patients. Serving patients encompasses care, but also overall experience, operations models and financial sensitivity.
Plenty has been written about the myriad of ways innovation is happening around care and patient experience, and that will continue to be spotlighted (because there are so many exciting innovations). But there are other areas where the impact of Chief Innovation Officers has been transformative. Here are three examples:
1) Adoption of Analytics
89% of health systems with Innovation Officers actively use data analytics to inform decision making. According to Deloitte, this kind of organizational commitment to analytics will pave the way for the future of healthcare. Real-time analytics that drive strategy and decision making is one of their six assumptions for meaningful disruption in healthcare. Prioritizing analytics lays the foundation for interoperable data, which in turn provides a framework for advanced analytics, blending data from a variety of sources and providing a holistic view of critical metrics and trends.
2) Translation & Implementation of AI
Big data, artificial intelligence and big data are buzzy descriptors that circle healthcare. Chief Innovation Officers typically have a strong background in technology and can seperate the buzz from the impact. Health systems that have Innovation Officers are more likely to implement blockchain, robotic process automation and machine learning tools. These tools can have a profound effect on patient experience, operational efficiencies, improve financial performance and drive differentiation, increasingly important in a value-based healthcare ecosystem.
3) Financial Improvement
Beyond the correlation to positive operating margins, Chief Innovation Officers can be directly involved in improving the revenue cycle. 24% of innovation leaders say their main focus is on financial innovation, encompassing the revenue cycle. While this isn’t the innovation we hear about day in and day out, it’s incredibly important. Each year, $240 billion is wasted in healthcare billing. Billing costs can be as high as 25% of hospital revenue. This huge administrative burden is in dire need of innovation and transformation. CINOs who champion strategy and technology around payments data, managing denials, and patient payments help cut waste and improve revenue.
As a country, we’re at a transformational tipping point in healthcare where patients are becoming consumers and the traditional models of care are being disrupted. This magnifies the importance and impact of Chief Innovation Officers. Undoubtedly, the health systems that commit to innovation will be best equipped for the new value-based world.