How academic medical centers and health systems are rising to meet the challenge of innovation Adapted from a joint study by Duke University School of Medicine, Harvard Business School and Russell Reynolds Associates, published in Healthcare Policy and Innovation

Healthcare policy is increasingly designed to incentivize transformation of health care delivery and payment model reform

“In recognition that the tyranny of the daily trumps In response, the Chief Innovation Officer the pursuit of the remarkable… absent a countervailing force… there is a (CInO) role has developed with the large amount of untapped creative energy mandate to identify new ideas, concepts in the organization; and it needs a beacon to and business opportunities, and then light the way.” develop the capabilities to support and – Study participant implement this agenda

This is, as far as we know, the first study of organizational innovation at We have found that there is remarkable health systems across institutions diversity across systems in role demographics, mandate, and structure

Position profile Out of the 40 top health systems by revenue ...

do not have a chief innovation officer We spoke with 20% 78% of those with a CInO

have a chief innovation officer 80%

Titling Origin Gender

12% 36% are Chief 60% internal 16% women of executives Innovation Officers dedicated to innovation do not have the word 40% external 84% men “innovation” in 52% of executives dedicated their title to innovation have the word “innovation” in their title

BACKGROUND

Education Functional Industry

No graduate degree Academic have an Operations Consumer Health MHA 5% 5% Strategy 10% Legal 5% 45% have an 40% MD 10% 5% 15% Finance have a 5% PhD 10% 80% 30% Healthcare 20% Technology have an MBA General & Ventures Management 30% have two or more graduate degrees

The majority of dedicated innovation executives has a medical or business degree, extensive management e4xperience, and a background in academic health or technology and ventures.

ROLE TENURE

67% 29% 4%

5 years or less 6-10 years > 10 years

The median number of years the position has existed in institutions is 4 years. This relatively new role is usually filled through internal promotions.

Organizational framework REPORTING STRUCTURE 8%

“If the innovation Chief Executive Other senior leaders 36% position doesn’t have 56% Officer a pretty direct channel Most common: to the CEO, it has no chance of succeeding. Dean of Medicine None.” – Study participant EVP, Clinical Services

BUSINESS STRUCTURE

Innovation function resides Innovation function resides within outside existing structure established organizational structure 20% 80%

12% 8% 52% 28% New business units New initiative New business unit Existing business outside existing outside existing within existing unit within existing structure structure structure structure

72% of organizations have developed an innovation center

Currently, the innovation function most often resides within the established organizational structure or within an existing structure, and reports to a non-CEO senior leader. What does this say about the priority of innovation as a strategic role if the majority of CInOs are not reporting to the CEO?

Mandate – our study participants describe their roles

“My job is to catalyze disruptive technology and to implement and “My role is strategic plus and integrate new models to be able to operations light. The role is rooted provide healthcare delivery services in defining a vision, but we roll up across the institution. I’m responsible our sleeves when things start up. for the integration, deployment and Once it’s up and running we can ration operationalization of technologies in the pe al take a step back.” O hospital.”

24% “My role is to look for people, ic “My job is to optimize teg processes and technology ra care over time and t innovations ... that will significantly S F space. I think about in improve our clinical outcomes and a overall quality of care 52% n operations ... I then need to find c

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issues and then think in a funding for it, operationalize it and l a more integrated way 24% turn it over to operations.” about care across the geographies that we serve.” “I always thought innovation was about trying new things, evaluating what’s working, and spreading best practices as quickly as possible. We “How you describe our mandate knew that we weren’t going to be depends on the timeline you are looking investing $100-$200M. We created at it with. The long-view is strategic. a top-down pool of funds for inside The short-view is financial. The financial or outside investors who were element is driven by the current realities focused on possible solutions for of the political climate, the economy, and our organization. We also created a how that converges on the markets that bottom-up pool for anyone within we serve, which are often underserved.” our organization who came up with a good idea around one of our focus areas.”

4 role patterns emerged ...

36% 28% 24% 12%

Internal consulting Incubator that grows Venture fund that Group that imports group that educates, and scales projects invests externally and and scales established advises and partners sometimes internally technology around continuous process improvement and scales established technology

Common thread: 68% introduced tech solutions as part of innovation agenda

Barriers

What is the biggest perceived barrier to innovation?

64% 16% 16% 16% Culture or Budget Talent Process organizational structure

Structural and operational barriers are the highest to innovation. Is it possible to meaningfully advance the innovation agenda within existing organizational structure? Is separation/reorganization needed?

Where do CInOs spend a disproportionate amount of time advancing the innovation agenda?

Operational Executive leadership Financial leadership Clinical or university leadership

36% 28% 24% 24%

The biggest perceived barrier to innovation is culture or organizational structure. Notably, none cited the as a barrier, despite the fact that the organizational board is involved with innovation efforts 72% of the time, most often to set up the role or implement a dedicated innovation center.

We believe that the CInO role is one iteration of a reactionary need to broaden innovation and strategic efforts. Further evolution of the role is expected in the years to come

5 years Today ago ɳɳ Roles are reactive, reflect attempt ɳɳ Internal and external ɳɳ All about execution to keep up innovation ɳɳ Fragmentation of roles ɳɳ Prompted by digitization of ɳɳ Clinical expected as organizations medicine, unprecedented access transformation narrow in on their “big bets” to data, advances in data science ɳɳ Revenue generation ɳɳ First signal of need to invest in ɳɳ Process improvement and mine institutional knowledge VC ɳɳ Fully-fledged investment capabilities ɳɳ Revenue generation Chief Accountable Care Officer Clinical Operations CInO Chief Medical Information Officer Role ɳɳ Clinical transformation ɳɳ Value-based care Chief Strategy Officer

Technology ɳɳ Data and analytics AI ɳɳ Streamlining efficiency ɳɳ Margin expansion

Considerations for academic health systems and integrated delivery networks seeking innovation reform

How can the organization best align targeted innovation with its mission and long-term strategy?

Who are the owners of innovation? How do they collaborate with the board, CEO and senior leadership team to achieve innovation through comprehensive support and investment?

What role will innovation play at each leadership level within the institution?

Can innovation occur within existing business structures, or is separation and/or reorganization required to realize innovation efforts?

AUTHORS `

KATE HARVEY is a member of the Russell Reynolds Associates’ AMY SADDINGTON is a member of Russell Reynolds Associates’ Healthcare Services Practice. Her executive search and assessment Healthcare Services Practice, and Co-Leads the Digital Health work focuses on directors, deans, chairs, and chiefs for prominent Transformation Practice. She helps companies build excellent medical schools, academic medical centers and cancer centers, as well leadership teams given the changing healthcare industry dynamics, as chief executive officers, senior executive management, physician and she advises clients on leadership topics and succession planning executive leadership and functional leadership positions. Her strategies. Her clients include private equity firms, Fortune 500, health consulting experience is focused on the intersection of healthcare systems, payors, digital and healthcare IT companies. Amy’s recent services innovation within prominent academic medical centers, work includes CEO searches for private equity-backed digitally enabled integrated delivery networks, and private equity portfolio companies. healthcare companies, President and COO searches for healthcare IT Kate also serves as the health care lead for the Diversity and Inclusion companies, and Chief Innovation Officer roles within large academic practice. She is based in New York. medical centers. She is based in Dallas. 277 Park Avenue | Suite 3800 200 Crescent Court | Suite 1000 New York | NY 10172 Dallas | TX 75201-1834 United States United States Phone: +1-212-351-2061 Phone: +1-469-232-3539 [email protected] [email protected]

JOY LEE is a member of the Russell Reynolds Associates’ Healthcare KEVIN A. SCHULMAN, MD, MBA, serves as a professor of medicine at Services Practice and a member of the Diversity and Inclusion Practice. Duke University where he is the Founding Director of the unique She supports the North American Healthcare team by executing Master of Management in Clinical Informatics program (MMCi). He data-driven research and market intelligence efforts, generating also currently serves as a Visiting Scholar at Harvard Business School. industry insights, and providing operational support. Her work spans Dr. Schulman’s research interests include organizational innovation in academic medical centers, health systems, payers, Fortune 500, and PE/ health care, health care policy and health economics. VC-backed clients. She is based in New York. SNEHA SHAH, MBA, is currently a fourth year medical student at the LAUREN MCCOURT is a member of the Russell Reynolds Associates’ Johns Hopkins School of Medicine. She completed her MBA at Harvard Healthcare sector and a founding member of the Digital Health Business School last year. She previously worked in corporate strategy Transformation Practice. She supports the North American Healthcare at Moderna Therapeutics, where she partnered with venture team by developing, planning and executing business development presidents and the executive leadership to prioritize projects and build projects and strategic initiatives for the region. Her work focuses on the 2016 long range plan, a strategy presented annually to the Board of biotechnology, pharmaceutical, diagnostics, digital health, healthcare Directors. IT and PE/VC-backed clients. She is based in Chicago.