How Academic Medical Centers and Health Systems Are Rising to Meet

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 Management 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 Chief Operating Officer 8% “If the innovation Chief Executive Other senior leaders 36% position doesn’t have 56% Officer a pretty direct channel to the CEO, it has no Most common: chance of succeeding. Dean of Medicine None.” Chief Strategy Officer – Study participant EVP, Clinical Services Chief Medical Officer 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 i 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 leadership 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 board of directors 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 ɳ Roles are reactive, reflect attempt ɳ Internal and external ɳ All about execution to keep up innovation ɳ Fragmentation of roles ɳ Prompted by digitization of ɳ Clinical expected as organizations medicine, unprecedented access transformation narrow in on their “big bets” to data, advances in data science ɳ Revenue generation ɳ First signal of need to invest in ɳ Process improvement and mine institutional knowledge VC ɳ Fully-fledged investment capabilities ɳ Revenue generation Chief Accountable Care Officer Clinical Operations CInO Chief Medical Information Officer Role ɳ Clinical transformation ɳ Value-based care Chief Strategy Officer Technology ɳ Data and analytics AI ɳ Streamlining efficiency ɳ 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,

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