Innovation: Fostering and Taking advantage of the Market’s Constant Imperfections

Innovation does not happen in a vacuum.

 

And that’s why the New Health Economy places such importance on the Entrepreneur.

 

Rarely is some innovation developed in a “lab.” Most of the time, and especially when it comes to wellness, health, and medicine, innovations come from the “marketplace” where real people are interacting, experiencing frustration or pain, and then acting to remove that frustration or pain.

 

(Ok, with the exception of “labs,” but the point is still important: rarely is any “lab” created that was not asked for, first, by the market place…unless it was created to sell another product. Even so, the point still stands.)

 

Innovation requires human action.

 

Innovation requires entrepreneurship.

 

It’s entrepreneurs that act to remove the frustration or pain by offering (and acting) on new ideas or methods.

 

Innovating occurs at all levels and in all manners of thinking – and doing.

 

Innovation rarely happens in Vertically Integrated systems.

 

In a horizontal system, innovation by one entrepreneur or entrepreneurial business can actually accelerate at its own pace without holding others back.

 

Yet, as innovation takes place, other companies and entrepreneurs adapt and make the necessary changes to catch up or compete.

 

And while entrepreneurs do make money for their innovations (and some times A LOT of money), all innovation eventually benefits the consumer the most.

 

Costs come down, new products are made easier to get access to, and life is made easier.

 

While there are a plethora of innovative products coming in the New Health Economy, no innovated product will make as great of an impact as the coming innovation in Patient Care.

 

These changes have been happening for some time now, but over the next couple of years, the innovation in patient care will accelerate and allow health care consumers the opportunity to receive the care they both want and deserve.

 

For the rest of this post, I’m going to focus on why and then how this move from vertically integrated population-based medicine toward the better-for-patients-and-health-professionals horizontally integrated personalized health management is happening.

 

In technology and economics, the term “network effects” is used to describe the positive impact on a business or system that an additional user of a good or service has on the value of that product or service to others.

 

This is obviously seen as a good thing, for both the current (and, potentially, past) users, but also for the new users of the product or service.

 

Conversely, there is something known as “negative network externalities.”  This is when more users make a product less valuable.

 

This is also known as “congestion.”  This is what happens to health professionals when they have too many patients.

 

When a health professional has too many patients, like what happens to vertically integrated systems as discussed in the post The Transformation to The New Health Economy ,there starts a cascading of failures that requires the health professional to find more energy (“money”) to either keep feeding the beast (their own vertically integrated system) or they must search for, or create their own innovation.

 

As we have discussed in other posts, there has been very little innovation in patient care in the American medical system because health professionals have been incentivized to NOT innovate and do population-based medicine.

 

If health professionals want to earn a living inside the current Matrix of Modern Medicine, they must see as many people as they can in a day and provide as many “treatments” as they can to as many people as close to the average as possible.

Yet, that is how the Matrix of Modern Medicine has been treating everyone for the last 120 years, and especially since the 1960s.

 

The Matrix of Modern Medicine has been incentivizing health professionals to treat their patients as the average of the average of the average.

 

There will be no innovation in “medicine” until incentives change. And incentives are not going to change in the current Matrix of Modern Medicine, because that’s how IT makes money.

 

However, in the New Health Economy, the innovations will be in health, first.