When innovation is stifling: A cautionary tale from athenahealth's Jonathan Bush

There was a time in Jonathan Bush's life when he thought Microsoft was cool. Word processing and the ability to send documents from computer to computer were novel, innovative and far-reaching developments.

"You could manipulate numbers without printing them, you could manipulate calendar appointments without printing them," the athenahealth founder and CEO said in his keynote speech at the National Healthcare Innovation Summit in Chicago. "You guys will not believe me when I say this — but it was really cool."

But then there was a shift, Mr. Bush said. Microsoft crossed into what Mr. Bush has deemed the URQS, the Upper Right Quadrant Syndrome. Once companies enter this region of the quadrant, companies have over-tilled their soil and their projections for growth are minimized.

UQRS case study: Microsoft vs. Apple
If looking at a quadrant, the upper right hand is a dangerous place to be, according to Mr. Bush. At the beginning of a product's life cycle, competition and innovation run high as companies strive to differentiate themselves from competitors. Every once in a while, a company breaks away and soars into the upper right quadrant. They become "big," securing the largest clients and not innovating as fiercely and competitively.

It is in this quadrant where companies then end up having to protect and defend themselves, compared to the lower left hand corner, where companies remain competitive and innovative. Or as Mr. Bush says: They remain "smaller" compared to the opportunity they face.

In the case of Microsoft, Mr. Bush said the company quickly rose and crossed the URQS line to a point where innovation was largely stifled.

"A part of the corporate brain stem…woke up inside [everyone] at Microsoft and said, 'Oh shit. I think everybody has our product. How will I make more money if everybody already has our product?'" Mr. Bush said.

Microsoft had, in Mr. Bush's words, "botched out the industry" by creating a type of establishment impermeable to outsiders.

Conversely, there was Apple.

Steve Jobs, former CEO of Apple, had a bumpy ride with the company. He wasn't well-liked and was even fired from his job because he was unable to compete in the market in which Microsoft had attained URQS, Mr. Bush said.

But then Mr. Jobs then came back to Apple. He by no means won that particular market when he came back. Still today, Apple computers are far outnumbered by other brands. Apple held just 12.7 percent of the market share in terms of units shipped in the fourth quarter of 2014, according to market intelligence provider International Data Corp.

"[Steve Jobs] came back and didn't make a better computer," Mr. Bush said. "He said, 'Screw this. I'm not going to make a computer. I'm just going to take the computing out of the computer and find somewhere else to put it.'"

And that was the birth of the iPod, a device that has revolutionized computing technology across the world. Mr. Jobs was able to do this, Mr. Bush said, by escaping that upper quadrant. He succeeded by creating a new market outside of the one in which he failed.

"[Steve Jobs] broke out of URQS," Mr. Bush said. "He actually found a way that he could show his employees millions and millions of miles of unplowed soil to go out and plow."

Framing the quadrant in healthcare: Moving outside the biosphere
Similarly, in healthcare, providers are focused on business within their own "biospheres" even though opportunities for growth are elsewhere.

Take, for example, interoperability. Historically, the goal of interoperability was to connect internal systems within one hospital, or within its biosphere. This was the vision because it was all hospitals and vendors knew.

"It's got to be interoperate because that's the only thing that Epic or Cerner or I [with athenahealth] was ever born to do, was get my various departments, to get my own train track to hold my own train as it went around the building," Mr. Bush said. "That was the strategic intent."

Hospitals upgraded their facilities and purchased state-of-the-art technology and information systems to achieve this internal connection and use it as a tool to draw people in. But now, healthcare is moving outside the traditional four walls, and hospitals and health systems have invested incredible amounts of money to attract people to their facilities while other options like retail clinics are available.

"Probably the most significant thing that's happened in the last five years outside of the biosphere is convenient care," Mr. Bush said. National chains of providers are taking over emergency care, posted up a quarter-mile from the hospital's emergency department providing convenient and faster care for individuals, Mr. Bush said.

Corner stores like Walgreens and CVS offer walk-in clinics where individuals can receive immediate care for minor and/or common illnesses and ailments for a comparable cost, but a fraction of the time. This poses a problem for hospitals and health systems, as it disrupts their traditional business model, Mr. Bush says.

In the traditional model, hospitals focused on their internal connectivity and communication loop within their own facilities. But now, patients are leaving those facilities. The investment and efforts toward intraconnectivity may soon be moot as individuals seek care outside of the hospital. With their heads in the sand, hospitals have focused on their own organization while retail clinics are making moves to provide consumers what they want: fast, convenient care.

The traditional healthcare business model is being disrupted by the innovators — the Walgreens and CVS' of the world — and hospitals are tasked with finding new ways to serve the individuals who are leaving the hospitals behind.

As retail clinics gain in popularity, the new care delivery model necessitates inter-access connectivity instead of intra-access. Inter-access is the ability of one system user to access information from other systems used by other CIOs. The ability to interoperate and share data with those outside one hospital or health system is what Mr. Bush suggests will be the key for these organizations to remain in the game.

The expectation for inter-access to data isn't entirely novel, as it is widely available in other industries. Mr. Bush outlined the example of United and Delta, both of which invested significant sums of money redoing their websites thinking consumers would skip the travel agent and book directly through them. But along came Kayak, which disrupted that idea.

Last year, United surrendered to Kayak, Mr. Bush said, and now consumers book tickets right through Kayak and never visit United or Delta's websites.

"There are too many [consumers] that have already made their decision that they want a marketplace, that they want a choice," he said. Mr. Bush tied the analogy back to healthcare saying, "I believe that those who go first on that will win enormous market share, and those that don't will be the ones who volunteer to get rid of the 40 percent extra beds."

Consumers are seeking the Kayak equivalent in the healthcare world. Instead of returning to the one place or one brand with which they are familiar, consumers will shop around, finding the best prices for the best deals. And healthcare organizations will miss out on an opportunity to serve these individuals if data exchange and inter-access remains within hospitals' own biosphere, Mr. Bush says.

Final thoughts
With all the emerging technologies, strategies, companies and innovations, the healthcare industry constantly runs into the issue of comparative advantage, Mr. Bush said. Oftentimes, hospitals and health systems see the successes of other brands and try to emulate their strategies, but every organization can't be all things to all people.

"It will be impossible for Rush [University Medical Center in Chicago] to ever develop the convenience and retail brand of Target. That's not a bad on [Rush]," Mr. Bush said. "Target will never do brain surgery as well as [Rush]. [Rush should] stop trying to be Target and they promise to never be Rush."

The healthcare environment is only going to see more and more companies emerging, and the best thing for providers to do to remain viable is not to necessarily dominate all markets, but to find the unplowed soil.

"To be the one that stops working at your local monopoly and starts breaking open requires enormous courage," Mr. Bush said. "This can happen, and it will happen, and it will not happen to everyone because there's too much. This will generate great scale, great efficiency and great value at the expense of those who try to defend their URQS position."

More articles on innovation:

What a DC hospital official learned from Apple, Chipotle and the zoo
Creativity before capital: Health systems and frugal innovation
Jonathan Bush says payer M&A signals downfall of innovation: 4 thoughts

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