Healthcare, not only in the United States but also in most developed countries of the world is ailing and in desperate need for help. Although the industry has made some advancements in case of healthcare innovation over the past few years, the packaging and delivery of treatment are often inefficient, ineffective, and not customer-friendly. Currently, key challenges in the healthcare industry range from medical errors to the soaring healthcare costs. The US government has been spending billions of dollars annually to identify healthcare innovations that can overcome these hurdles. Despite this, several of these efforts sometimes fail, leading to heavy losses for investors.
In this blog, healthcare industry experts at Infiniti Research discuss three key barriers to healthcare innovation.
Barriers to Healthcare Innovation
Unaligned budgeting units
Hospitals are generally organized by clinical departments, care centers, and other ancillary departments each with their own budgets. As a result, it becomes difficult to align those budgets and department goals in such a manner that one innovation works for all budgets. These decentralized budgets often lead to limited investment in healthcare innovation projects which could ultimately benefit the patient throughout the entire care cycle. Experts at Infiniti suggests that a single, unified budget dedicated just to healthcare innovation could help address the problem of hospitals not taking advantage of innovative solutions.
Rigid annual operating budgets
The annual budget model that hospitals usually operate under makes it difficult to invest in recent technologies and other healthcare innovation. Furthermore, investing in healthcare innovation will likely reduce their available funds for the rest of the fiscal year. Unless the payback period from the new healthcare innovation investment is realized in the current year, hospitals tend to reject the proposal to buy new technology. To overcome this, players in the healthcare industry can consider moving toward a budget process wherein the healthcare organization allows each department to keep a certain portion of the savings it created from the ROI of the new technology for future year budgets.
Separating operating- and capital-budget timelines associated with healthcare innovation
In many healthcare systems, technology hardware and perpetual software licenses are paid for with capital budgets. Whereas, annual subscription models commonly used by software as a service (SaaS) solutions are purchased with the operating budgets. So, the source of funding (capital or operating budget) rather than the functionality and performance of alternative solutions determines the purchases made. In order to overcome such innovation barriers, organizations should purchase new technology not based on whether it fits into capital or operating budgets, but by weighing the performance and ROI of each solution that they are considering.