Thursday, September 5, 2013

Reverse Innovation – why would a rich man want a poor man’s technology?

We have an unsustainable healthcare problem here in the United States. By now, it is common knowledge that we as a nation spend much more money on healthcare than any other developed nations; our return on investment compared to other developed nations is dismal. According to a 2012 study, the U.S. spends on average $8,233 per year per person on healthcare. This is close to three times more than most developed nations in the world, including rich European countries like France, Sweden and the United Kingdom. As a nation, the U.S. spends around 18% of our GDP on healthcare; this is twice the OECD members’ average.


But how do we stack up against the other 33 member nations of the OECD?



First, there are fewer physicians per person in the U.S. than in most other OECD countries. In 2010, the U.S. had 2.4 practicing physicians per 1,000 people -- the OECD average was 3.1. The number of hospital beds in the U.S. was 2.6 per 1,000 in 2009, OECD average was 3.4 beds per 1,000 population. Second, although life expectancy at birth in the U.S. increased by almost nine years between 1960 and 2010, but that's much less comparably to the increase of over 15 years in Japan and over 11 years on average in OECD countries. Your average American in 2010 has a life expectancy of 78.7 years, more than one year less than the average of 79.8 years in other OECD member nations. (Jason Kane, Health Costs: How the U.S. Compares With Other Countries, PBS News Hour, Oct 22, 2012.)

So spending more and more in the U.S. isn’t getting us better healthcare or better access to care; and with the implementation of Obamacare, we as a nation need to put focus on how to improve the quality per cost ratio rather than just providing more and more expensive universal care. If we don’t, albeit we have the moral high ground to provide care to the sick and the poor, we will not be able to afford the program in the long run. We risk not only bankrupting our faith in fundamental access of healthcare as a human right, but we risk deterring further incentives to do the right thing by dragging our economic infrastructure along for slaughter.

With that said, there is hope yet for our flagging healthcare policies. While the politicians and lobbyists hammer out the details and pundits ponder their existential worth, entrepreneurs ought to take a closer look at the prospect of improving the quality of care by incorporating existing matured technologies into the healthcare industry to fill in the proverbial gaps between spending and return on investment. As Global busi­ness strate­gist Vijay Govin­darajan pointed out recently at a Northwestern University event, there is a wider phenomenon in innovation that is happening on a global scale that can be applied to the healthcare industry to help the U.S. gain momentum. This phenomenon coined as “reverse innovation” is about democratizing technology, providing access, cutting cost, and most of all—solving a problem. In other words, healthcare innovators in the U.S. should start thinking about reverse innovation in the sense of acquiring methods developed by countries that spend far less on healthcare but are getting more for their buck. By importing cost-effective technologies and systems from low- and middle-income countries to the U.S., we can hope to reduce cost, increase access, and improve quality control and accountability. Combined with existing matured mobile technologies, and integrated with real time data capturing and process improvement principles, this kind of reverse innovation will help reduce the fear of overspending and provide universal access while improving the quality of care rather than quantity of care.

At the end of the day, this is not just about stealing new tricks for an old problem. This is not just about cost either. It is about offering more for less, offering better care and universal access without jeopardizing spending. This is about finding opportunities and making them pay off for everyone—the essence of sustainable practices. I firmly believe universal healthcare is a fundamental human right and the only practical way of achieving that fundamental right is through democratization of basic resources in the most efficient and effective ways with serious data collection for continued improvements. Accountability is the key but innovation is the lock that must be opened.

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