Matching Entrepreneurs with Markets to Cure Health Care’s Woes

Michelle Eckert–(Mack Institute)–By some measures, the U.S. health care industry has the most expensive yet least effective system compared to other industrialized nations. While providers struggle to control costs while providing quality care, they face an innovation problem common to any distressed industry: With resources stretched to the breaking point, who has the means to evaluate — let alone select and implement — the novel solutions so desperately needed?

Health care systems are in the business of treating human disease, not diagnosing their own maladies. Increasingly, entrepreneurial ventures have emerged to offer cures for what ails the industry, but these face their own obstacles: they must confront health systems’ (understandable) fear of an unknown quantity. No one wants to employ a new tool or partner with a start-up only to see it disappear a year down the road.

With such a mismatch, it’s natural that an intermediary would emerge to bridge the gap between providers and entrepreneurs. At the Mack Institute’s Fall Conference 2014, executives from AVIA spoke about their company’s collaborative strategy for pairing providers with solutions.

The company approaches problems by creating “innovation cohorts,” or groups of health systems all struggling with similar issues. As chief strategy officer Leslie Wainwright described, one cohort faced the problem of poor patient retention. Avia helped identify a pool of potential technological solutions focused on improving patient referral systems, and then worked with the providers to narrow the pool. The process resulted in a classic win-win: The cohort members collectively identified and implemented a solution, and an emerging company received a ready-made market for their product.

“We’re acting as true partners to health systems,” explains Avia’s CEO Eric Langshur. “We’re able to de-risk their selection of innovation, we’re able to assist in the implementation of those innovative solutions, and we’re able to measure and celebrate the impact that those innovations have on their business and the care that they deliver.”

Although Avia focuses exclusively on the health care space, its approach – aggregating demand and matching it with suppliers – could easily apply in other struggling industries. Firms may balk at a cohort model involving potential competitors, but there are advantages to taking a collaborative tack: research shows that large firms may achieve better outcomes when using an alliance-based strategy to confront disruptive technologies.

“The cultural pieces that make innovation hard are truths regardless of what sector of the economy you’re dealing with,” says Wainwright. By seizing the right opportunities to form a culture of collaboration, firms across industries just might make it a bit easier for themselves.

Michelle Eckert is Marketing and Communications Coordinator for the Mack Institute, where she works to engage students, researchers, and corporate partners in opportunities for collaboration.