Book Excerpt: Healthcare Disrupted

Next-Generation Business Models and Strategies

CHAPTER 8: TOWARD A NEW MODEL OF
COLLABORATION AND COMPETITION

All new healthcare business and operating models must rapidly embrace technologies that are fundamentally collaborative; building ecosystems of value-enabling partnerships is both strategic and an operating imperative. The catch is that the nature of collaboration in this context also breaks new ground for many businesses in the sector.

When a pharmaceutical or medical device company expands its product offerings to include therapeutic and digital attributes, it will also need to forge unprecedented partnerships with organizations that might have never before been on its radar. Only by doing so will it be able to work with, and within, a finely tuned ecosystem of real-world data, analytics, sensors, devices, and digital apps. Only by doing so will it develop a digital business foundation that can keep pace with disruptive change, align with a global digital infrastructure so that it can operate at a population level, and leverage digital economics.

In the digital world, collaboration and competition sometimes do not seem far apart, but in this new world, partnerships, collaborations, joint ventures, and population-scale pilots with competitors and other healthcare stakeholders will predominate. These unlikely partnerships will reinvent the entire value chain of the healthcare industry, from R&D to supply chains, to care.

No single company will be successful with a go-it-alone approach. But the double-edge is that few relationships will be exclusive; that is the nature of digital and cloud-centered operating models. Protections of proprietary approaches will come from achieving scale rapidly, accelerating and applying meaningful insights, and setting the pace for delivering value.

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The healthcare system is still governed through regulations that limit interactions among health providers, health payers, and manufacturers. Many of these regulations were defined during a period of time when healthcare providers solely delivered care, manufacturers marketed only their own products, and health payers reimbursed according to procedures performed. They kept healthcare players at arm’s length from one another in order to prevent market influence from swaying decisions and directing the flow of funds and to keep the focus on clinical evidence.

But health providers today are increasingly managing both clinical and financial outcome goals. Health payers are assuming responsibility for care and clinical outcomes. And manufacturers may have the prices of their products driven by validated outcomes, or they may be bearing risk for achieving an outcome. Increasingly, all healthcare participants have the same information and the same analytic needs.

The scope of capabilities and changes needed to identify, design to, and realize value is beyond any one company. And so Around-the-Patient Innovators and Value Innovators are putting together critical partnerships and relationships with regional health systems, with advanced technology companies enabling care in remote and home settings, and with the New Health Digitals.

These new forms of collaborations directly enable new business and operating models. They also call for aligned investments in new technologies and the joint shaping of new uses and markets. And this means that even as these organizations break new ground together, they are also changing the nature of competition. In digital business models and digital medicine, advantage gets created with scale. With scale comes influence, as any given solution may become the new standard. With broader use of a platform, actionable insights accelerate. So digital economics are prevailing early on, creating an advantage for those that move early to collaborate, and making it difficult in some situations for later entrants to justify the investments and access the partnerships that may be required to catch up.

CRITICAL INNOVATIONS FROM ‘WITHOUT’

Adjusting to the fact that more innovations will likely come from outside their organizations and companies than inside is easier to accept in theory than it is in practice. And yet doing so is a competitive necessity. Many if not most of the leading companies today are innovators, but the market innovates several-fold more than any single company.

Consider the evolution of research and development (R&D) in pharmaceutical companies as an analogy. Think back to what it looked like in the 1990s. Since then, it has been completely transformed from an inwardly focused, horizontally integrated, and largely unproductive set of functions to an externally sourced, highly productive, and highly collaborative system. Before this transformation, many life sciences and R&D organizations attempted “going it alone” in their efforts to understand the pathophysiology of a disease and identify new therapies to bring to market. Now, however, R&D is increasingly taking place in clusters—areas where there is an unusually high concentration of academic research and pharmaceutical enterprise activity, such as Cambridge, Massachusetts and San Francisco, California in the United States, and Basel, Switzerland.

These regions are now large engines of innovation, where ideas are moved from basic scientific insights discovered in academic centers to full clinical development and commercialization in a combination of biopharmaceutical and larger pharma partnerships. The initial basic research is often government funded. When research begins to show promise, entrepreneurial angel funds often provide money to create companies that will advance early phase programs to meaningful milestones. From there, if successful, venture capital–backed firms transform the idea into a marketable therapeutic, launching it into the marketplace as an initial public offering or letting it be acquired by a larger biopharmaceutical company. It is a highly productive, interdependent, and collaborative model. It is unlikely any one company could bring together the same sets of differentiated capabilities, talent, financing, and cultures required for innovation by itself.

Now think of the demand for new forms of innovation to deliver outcomes and value in a “volume” world. All value-based business models will be digitally enabled and powered and moving at digital speed, with increasingly digitally driven economics. And they will need a critical network of partners and (sometimes unlikely) collaborators in order to innovate at the pace of the market.

VALUE INNOVATING WITH YOUR CUSTOMERS

Biopharmaceutical and medical device companies used to view health providers as customers where the goals were to build loyalty and increase their relative share of products purchased. Health authorities and private payers viewed pharmaceutical and device companies as purveyors of products that could drive up their costs. Health providers often viewed them similarly, but also felt a responsibility to consider prescribing the latest approved therapies and gaining experience with them, given their promise. All parties were captured in a volume paradigm.

However, with the move to value—a focus on patient outcomes, and the goal of advancing the health status of a population with greater efficiency—there is new purpose in collaborating with one’s “customers.” Health providers, health authorities, health payers, biopharmaceutical and medical device companies all have aligned interests on which to build.

Consider several examples, beginning with Novartis. In August 2015, Novartis put together an outcomes-based program with the National Health Service–Wales that is brand or product neutral, focused on the total patient (e.g., heart failure with the diabetes that is associated with it 70 percent of the time), and comprehensive in systems focus and inter- ventions. It is explicitly:

1. Multi-interventional, addressing risk factors, clinical and operational pathways, performance management, skills building, mindsets, and behavioral changes and other relevant factors.
2. Multi-morbidity focused, adopting a “whole patient,” multi-factorial perspective.
3. Multi-drug—not confined to any one medicinal product or medical device.

This program is comparable to the 2015 Boston Scientific collaboration with Karolinska University Hospital, Sweden we described in Chapter 6, where the goal was to develop a comprehensive approach tuned to the new value-based reimbursement and population health goals set by Stockholm County Council.

Philips, using a Healthcare-Gone-Digital approach, offers another example. Philips, in 2015, created a $500 million multicenter collaborative model with Westchester Medical Center Health Network (WMCHealth) in Valhalla, New York, (after developing a comparable relationship with Georgia Regents Medical Center in 2013) to provide connectivity across the health system and into remote sites of care on the foundation of its HealthSuite cloud services and technologies. These relationships seek to define and deploy new patient-centered models of care to support population health management services in an increasingly value-driven reimbursement environment.

Merck & Co. developed collaborations with Regenstrief Institute in 2012 and Maccabi Health Services in 2014 to advance real-world analytic insights to help optimize patient treatments and outcomes. Both relationships involved accessing masses of real-world electronic medical-derived data and advancing insights within an advanced big data analytics environment.

And as a sign of what can already be considered the “next generation” of this model, Intel, in August 2015, forged a collaboration with Oregon Health & Science University (OHSU) and other academic Cancer Centers focused on advancing interpretation of molecular data on cancers and other diseases to aid more precise treatment selection and treatment monitoring. As part of the collaboration, Intel assembled a secure and HIPAA compliant multisite infrastructure for sharing patients’ electronic medical records and molecular and genetic data.

Intel clearly sees the opportunity to advance meaningful insights into an area that is growing as fast as the Internet itself (as Figure 8.1 shows, within the next 10 years, the amount of new data created each year from genetic sequencing and genomic analyses will exceed the amount of data created on YouTube).

These aren’t nearly all.

In August 2015, Accenture advanced a similar collaboration with Duke University and the Duke Health System to provide predictive insights into the efficacy of different patient treatment approaches and clinical interventions. The joint team will utilize advanced predictive analysis to identify the most effective care management interventions for optimizing patient outcomes in the shortest amount of time at the most efficient cost.

Meanwhile, the venture-backed private entity TriNetX is working with a global network of health provider participants who participate in the initiative Informatics for Integrating Biology and the Bedside (i2b2). This company is enabling direct interactions for trial design, prospective recruitment into regulatory clinical trial studies, or noninterventional observational studies. It has already fostered a dynamic and collaborative network of patients and expertise that less than three years ago would have been technically infeasible, cost prohibitive, and out of consideration for competitive reasons.

Think of these examples as just one “highlight” reel. These kinds of collaborations have the potential to transform the entire healthcare value chain. The insights into patient populations that can come from rich genomic, genetic, and pathway biological data collaborations can accelerate the time it takes to identify a new therapeutic target in a devastating disease and increase the confidence in the success of the program. These same data, combined with health provider insights coming from the collaboration, can drive to a new approach to early phase clinical trial design and execution that focus on the most meaningful endpoints and real-world relevant approaches. We use the term precision medicine when we describe the use of genomic, genetic, phenotypical, and other real- world data sources to select a specific therapeutic and treatment approach—but “precision” is best designed into approaches, beginning with the earliest phases of biological target identification, and the design-to-regulatory clinical trials.

As digital medicine and new forms of technology and customer-centric collaborations determine how healthcare companies innovate, we will see R&D as a continuous process. It will certainly be inclusive of the traditional regulatory phases that brought forward new medicines, but increasingly the value will come from what continuous real-world insights, advanced analytics tools, and digital medical services bring to the patient and health system.

We do believe that healthcare provider and industry collaborations and initiatives will increase, just as we are seeing provider-to-provider programs scale, as well as provider-to-disease association, and provider-to-health payer initiatives form. These trends together help ensure a growing and more rapid access to confederated data sources, technical expertise, and accelerated insights.

These are new forms of relationships. Increasingly less of the dialogue is around product share and incentives to increase loyalty. Health authorities, health payers, and health provider relationships are becoming value focused, aligned around joint responsibilities, and highly interactive. These relationships provide access to real-world data at population scale, advance new views on how to optimize care around the patient, and broadly challenge the historical paradigm of roles and capabilities in the delivery of care. Parties come to these new relationships committed to the transformation of healthcare for the benefit of the patient and health system.

DRIVING CONVERGENCE: AT THE INTERSECTION OF THERAPEUTICS, DEVICES AND PROCESS

As less of the dialogue in senior-level meetings focuses around product share and incentives to increase loyalty, more will be about how therapeutics, devices, data, and processes intersect, and how various stakeholders will share and claim their own value from the mix.

For example, the Around-the-Patient Innovators, the Value Innovators, and the New Health Digitals appreciate the same insight: Health and healthcare are systems requiring system thinking and solutions. They further appreciate that robust systems are rarely hub and spoke but rather are mesh-like networks, self-healing, with many alternative paths, and with intentional redundancies mimicking those found in nature. Historically, the companies that are today deploying value-centric strategies were point solution providers. In the future, we see their solutions driving value, requiring a set of complementary technologies that can identify specific patients (through real-world data and analyses), assess a health status in a remote setting (through sensors, wearables, and other devices), and offer services to support care management (through integrated patient care management solutions).

The Digital Gone Healthcare organizations—in particular, the large platform services and advanced technologies companies among them—are in fact supporting this kind of network by creating a broad set of mutually reinforcing initiatives across health providers, therapeutics, medical devices, and health services companies. And even as they connect clinical decision support initiatives with health providers, they are also extending the networks to include retail pharmacy and employer programs. What is common across these is providing an integration of remote sensors and monitoring technologies, advanced analytics and machine learning, and new physician and patient engagement technologies.

Qualcomm Life has been highly active in both healthcare provider collaborations and with leading pharmaceutical and medical device companies. Qualcomm Life recently announced a heart failure remote care management program with DaVita HealthCare Partners. They are further deploying the same technologies with partner P2Link with Emerson Hospital in Concord, Massachusetts for chronic obstructive pulmonary disease (COPD) and heart failure patients to better realize “the promise of the ‘triple aim’: a better care experience, improved health outcomes, and lowered costs for the 300,000 individuals to whom we provide Premium Care.”

For example, in early 2015 Roche and Qualcomm Life announced a strategic collaboration wherein they can provide a digital capability for “connected chronic care management and remote management solutions (that) can enhance patient care, enabling providers to asynchronously communicate with their patients in a high-tech, high-touch model minimizing risk of errors in result reporting.” Similarly, Novartis announced the formation of a joint venture fund, dRx Capital AG, to advance investments in new digital business models, digital medicines, and critical enabling digital infrastructure for delivering value to patients and health systems. In addition, Novartis is initiating new clinical trials with a set of digital tools and technologies that mirror those it can make available to patients and healthcare providers at approval and commercial launch.

Roche Pharmaceuticals of Basel, Switzerland, and Foundation Medicine of Cambridge, Massachusetts, a next-generation sequencing–based medical diagnostic company and an individualized cancer treatment selection company, respectively, created a multifaceted collaborative relationship. And Daniel O’Day, chief operating officer, Roche Pharmaceuticals Division, noted in April 2015 that “molecular information is playing an ever-increasing role in the treatment and management of cancer” and that the collaboration could “optimize the development of and access to novel treatment options for cancer patients and to advance personalized healthcare in oncology.”

Collaborations and technologies focused on transforming models of healthcare and maintaining health impact the entire value chain—from the earliest R&D to creating the foundation for a patient-centric supply chain. R&D approaches that link directly to technologies and insights available in actual clinical settings—for example, the Roche-Genentech/Foundation Medicine relationship, and Qualcomm Life and Novartis, to name only two described herein—ensure that value is integral to the program from the outset, that our approach is consistent with the goals of precision medicine, and the patient is always at the center. They are sources of insight, drive prioritization, and are brought into the design of clinical studies.

Healthcare in this regard has much to learn from other industries, such as consumer electronics and consumer goods, which deal continuously with market volatility, but have the advantage of rich, always present data. The optimal new value- and patient-centric company with a digitally enabled and integrated operating model will be capable of predicting and translating market trends, health provider requirements, and patient needs through integrated planning, and patient-pull product supply and location priorities. To achieve this, the traditional supply chain must be transformed into a digitized value network with analytics at the core. Companies must reorient their traditional supply chain mentality and operating models to the patient, having their needs and requirements translated into new requirements for products, personal and remote devices, and location of care.

We are seeing large platform services and advanced technologies companies creating a broad set of mutually reinforcing initiatives across health providers, therapeutics, medical devices, and health services companies. IBM’s Watson Health, for example, has initiated clinical decision support initiatives with health providers to make complex, multifactor, clinical decisions easier. It has also moved into the retail pharmacy and employer programs with a broad collaboration with CVS Health. As Dr. Troy Brennan, CVS Health chief medical officer, noted in a July 2015 Forbes interview, “This collaboration enables us to learn about how other sources of health information could help predict declining health or the need for an intervention for a patient with a chronic condition. For example, we can learn if information about a patient’s activity levels from a tracker like a FitBit™ could help us identify their risk for declining health.” The collaboration’s explicit goals are to provide the operating infrastructure for the health system’s transition from fee-for-service medicine to value-based reimbursement.

The foundational capabilities of these health system, pharmacy benefit manager, and consumer pharmacy retail collaborations link to the medical device and biopharmaceutical collaborations put into place with Medtronic, Johnson & Johnson, and others. These are focused on improving the care of diabetes by creating an “Internet of things” network of remote blood glucose monitors, insulin pumps, personal activity devices, and more. Together, that network will generate insights that create a real-time, practical view of the patient journey. It will also enable a view that aligns the patient activities that are critical to achieving the best possible outcome with the activities that occur within the provider health system, creating a form of expert digital advisor and care assistant.

Consider an unlikely New Health Digital company, Salesforce.com. This company, with its large-scale digital infrastructure, has launched a platform to integrate care among healthcare providers, clinicians, and patients. The platform was developed through piloting with three health systems: Centura Health, Radboud University Medical Center, and University of California San Diego, together with DJO Global, Inc., a medical device and supplies company. It is further being deployed as a patient-care service, enabling the infrastructures of biopharmaceutical and medical device companies that are transforming into Around-the- Patient and Value Innovators. One example of this is Philips Medical with its HealthSuite cloud services that integrate with Salesforce’s Health Cloud and that now will include a heart monitoring watch, blood pressure monitors, a body analysis scale, and ear thermometer all transmitting data into the cloud for advanced integrated analytics for cardiovascular and musculoskeletal diseases. Philips further partners with Amazon AWA competitors Rackspace and Alibaba for cloud hosting its HealthSuite data. This bridges the more hospital-centric offerings of Philips with a more consumer-oriented solution.

Key remote sensors, remote monitoring technologies, and digital engagement infrastructure are being jointly developed, integrated, piloted, and deployed working through parallel initiatives with healthcare providers, health authorities, health payers, pharmaceutical companies, and medical device companies. This trend is changing where and how healthcare happens, and how value is realized. It is further reinventing the overall innovation and supply chains of the industry. The integrated technology solutions being considered by pharmaceutical, bio- pharmaceutical, and medical device companies have origins—or validation—with health systems and health authorities.

The goals of these collaborations and partnerships are consistent and two-fold: drive (1) outcomes for the patient and (2) billions of dollars in value for the healthcare system in optimized treatment selection, reduced length of stay, avoided errors, and avoided readmissions through integrated technological and digital solutions. These are the technologies that will define the new category of “digital medicines” as life sciences companies take their traditional core—their therapeutic products—and ensure value through patient care services, new contract structures, and potentially altogether new businesses.

MAPPING BIG DIGITAL: WHERE DIGITAL CONSUMER AND DIGITAL HEALTHCARE MEET

The digital factor warrants a deeper dive. We cannot conceive of a broadly deployed and large-scale solution that does not recognize what’s in the pockets, purses, and homes of consumers. If remote monitoring technologies, sensors, and advanced analytics tools will provide a new definition of the value-centric company’s products, then the enormous scale, ubiquity, and new digital economics of the Digital Gone Healthcare businesses represent their operating infrastructure and the foundation of their new solutions. These will involve:

Redefining patient relationships. These relationships are becoming empowered, active, and self-directing.
Creating new digital operating partnerships. The new digital collaborations de-emphasize labor market arbitrage and per unit costs in favor of building in intelligence within the supply chain, customer operations, and patient services.

Accessing but not owning many assets. A key insight of the most disruptive of large-scale digital operating models is that ownership is not required to have the same effective control and improved economics.

Collapsing margin economics through the model. Over time, the implementation of digital remote monitoring, digital engagement, and digital medicine will be consumption-based or provide unlimited access at limited incremental costs or costs that move toward zero (price for volume, versus consumption based, versus “all you can eat”).

For example, when Apple Inc., Cupertino, California, announced the availability of ResearchKit and HealthKit, Stanford Cardiovascular Health announced one of the early apps seeking to enroll participants into a long-term observational clinical study. They gained more than 10,000 participants in one day. Alan Yeung, medical director of the program noted, “To get 10,000 people enrolled in a medical study normally, it would take a year and 50 medical centers around the country, that’s the power of the phone.”

The new digital operating infrastructure and scale have never before been seen with a healthcare provider, health authority, health payer, or life science company. This all-digital infrastructure reduces the need for capital and highly specialized talent, declines in price through the years, can be paid for as consumed, and is lower cost at higher rates of utilization. It further liberates operations to move toward a digitally enabled intelligent supply chain and operations. Digital operating models allow greater agility, speed, and innovation at scale. These models are inherently more cost efficient as they leverage digital economics and provide more oppor- tunities for customer and consumer interactive relationships.

Digital business models, powered by digital operations, offer the opportunities for digital economics. These scale rapidly at rates of growth approaching logarithmic. The disruption from Uber has already been massive with taxi and pre-book limousine business down in every major market within two years of entry. That includes rapid devaluation of taxi medallions and licenses. Uber is even capable of seizing adjacencies with its asset-less transportation infrastructure such as in-region package delivery. In its own postings for advanced analytic and digital talent, Uber notes that its goal is “moving real people and assets and reinventing transportation and logistics globally.”

We are seeing these same digital economic trends in other areas, such as Google in mobile advertising where they are partnered with Acxiom Corp., the Epsilon unit of Alliance Data Systems Inc., and Oracle Corp.’s Datalogix. Battling this model is Apple’s App ecosystem, which may block, subsume, or compete side-by-side as a parallel ecosystem. In either case, the Apple App ecosystem employs more people than all of Hollywood, and, in the United States and Europe, is driving hundreds of thousands of new job creations—more than all the major pharmaceutical companies combined. Neelie Kroes, the European Union Commissioner for the digital agenda, in an interview in 2014 with the Financial Times, noted: “The speed of job creation and revenue growth in the app economy is incredible. What other sector grows 25 per cent a year? The ripple effects go far beyond the app makers themselves. Apple and others have started an economic revolution, and I want Europe to be front and center in that action.” In this case we have the zaibatsu of Apple iOS ecosystem versus the Google search and mobile platform keiretsu.

Life science companies will need to clearly define where they are in two critical dimensions: (1) the digital intensity in their relationship with customers, and (2) the digital diversity reflected in various partners’ elements of the operating model and go-to-market capabilities.

Customers and consumers will have different levels of expectation with regard to digital intensity. They can be sorted roughly into four categories based on their comfort with digital technologies:

1. Traditional customers rely on traditional channels and interactions. Yet, even they leave digital traces.

2. Experimental customers selectively engage in digital for the value it delivers. They are discovering how their experiences can improve in the digital world.

3. Transitional customers accept that digital is a good thing. They strive to leverage digital more broadly, but may not always be able to do so.

4. Digital savvy customers, the most digitally intense group, make digital technology part of all dimensions in their life. Mobile access and engagement is their new frontier.

The more “transitional” or “savvy” customers are (or become), the more collaboration and partnerships with the Health Digitals will prove critical.

Digital diversity will define key elements of the company’s operating model and further define areas of partnership and operational alliances building out the digital enterprise and operations. It focuses on (1) Making Markets, or the digitalization of commercial support and direct customer interactions; (2) Sourcing Inputs, or the digitalization of the supply chain as direct inputs or as coordination; (3) Running Enterprises, or digital-enabling the core operating infrastructure of the enterprise; and (4) Fostering Enablers, or those aspects of the enterprise culture, talent, and diversity that allow the transition to digital. While a company may choose to engage with Google’s cloud services and analytics teams for Running, it may further be seeking to accelerate its recruiting of key talent and to create a digital and analytics-driven culture.

In 2015, New Health Digitals announced major new investments, initiatives, technologies, and operating realignments to advance in healthcare and life sciences. These companies are creating the enabling infrastructure of digital health and digital healthcare. Consequently, the companies that work with them must be clear about the strategies they have defined for themselves, and the roles that they will (and won’t) take on. Partnering successfully will require some “strategic wariness,” as portions of solutions are integrated into the apps, clouds, and new vertical market initiatives emerging from other sources.

COMPETITION: PROTECTING THE BUSINESS

The conundrum of digital ecosystems and cloud technologies is that new innovations are increasingly accessible. Digital ecosystems have distinct standards (e.g., Apple’s APIs for HealthKit and ResearchKit and development of the Swift programming language). Cloud technologies achieve global scale by embracing new ideas, requests, standards, and so on into the environment that is available for all. Imagine the complexity of a single pharmaceutical or device company having to code a unique interface for every health system and electronic record system it encountered—in terms of time to complete, expense to execute, and expense to maintain—this would soon collapse on itself. This universal access to the same capability infrastructure, predictably declining costs, and ever-increasing global scale is why digital is both unavoidable and a catalyst for growth. It is the necessary, but not sufficient, foundation.

Uber went from a shared ride service with different cost tiers into experimenting with package delivery; as we write, there are rumors it may seek autonomous vehicles as another service—essentially competing with the same drivers and car assets that were the foundation to its original business. The company that provided the initial opportunity gains a lens on new sources of growth and large profit pools potentially accessible to them through an adjacent and further disruptive move. That is digital, where the collaborator may become the competitor if it can move more functionality into its digital services model.

Already you can see competing ecosystems evolving. Qualcomm Life, a direct competitor of Philips HealthSuite and consumer-connected devices, is partnered with a leading electronic medical record (EMR) company, Cerner, and health information exchange infrastructure provider, Orion Health. Orion Health in turn is a key partner of Amazon’s AWS health cloud services. Qualcomm Life is also a featured connected health partner within the Amazon AWS Partner Network (APN).

Similarly, IBM’s Watson Health is partnered with the EMR company Epic, as well as Apple, for advanced analytics and cognitive computing driving disease and population health management approaches. Apple in turn is partnered with Epic for supporting patient access to their health information from Epic EMRs. And so it goes—there are clear sets of highly interdependent digital partners that are also occasional competitors creating the next generation of digital health and healthcare management infrastructure.

So is the solution to pick a confederation, create one, or play across them? The likely answer is a bit of each. Companies will need to create and work across partner networks, keeping in mind the following points:

• Access to critical real-world data and the technologies to glean insights are baseline requirements. Value-centric enterprises have significant real-world data requirements and are analytics-driven in decision making and resource allocation. Often the motivation to collaborate or to compete will be driven by this as a primary goal. If data are made fully available, the value of collaboration is higher than competition. If data access is limited, the partner will likely become a future competitor.

• Relationships will define market capabilities and access. Not all technology and digital infrastructure companies have the full scope of required services to scale globally. Therefore, a network approach will likely need to be global. This can include customer relationships, technology partners, and go-to-market partners delivering a value service.

• Point-to-point, therapeutic-to-therapeutic, and device-to-device views of competition may be less important than a network of privileged partnerships. In devices, sensors, data acquisition, data aggregation, and advanced analytics there are increasingly alternatives. So the network of partners who have a demonstrated ability to play together may be more important than single technology views of collaboration or competition.

• Digital distributes, democratizes, and pushes capabilities to their limit. Over time, cloud services and cloud integration will democratize access and costs. The competitors that likely matter most are those able to scale, identify opportunities, and drive costs down faster than a digital competitor.

Digital speed and economics will demand a view on partnerships and collaborations as a set of accessible capabilities that brings the benefit of influence without asset ownership. But the real competitive advantage will be defined by the speed with which value is delivered to the health system and patients, the breadth of the markets and populations reached, and the continuous empowerment of those customers and consumers for better healthcare and health management. The companies and partnerships driving this will be the competitive force to focus on.

CHANGE CATALYZING COLLABORATION CATALYZING CHANGE

This evolving, collaborative era in healthcare is in so many ways a special case of Open Innovation, a topic that is quite mature in management literature. It, too, encompasses the themes of broader and more explicit precompetitive technologies and insights, where the value of collaborative problem solving and effort on difficult issues is higher than exclusivity and the protection of proprietary ideas.

Value innovation requires access to data—real-world data from many disparate sources—and practical insights from those data. While today much of these data come from secondary sources and aggregators (such as United Healthcare’s Optum and the Explorys unit of IBM’s Watson Health), in the future these data will increasingly be accessed directly from health providers through the data channels going into place that enable the integrated care management models required by healthcare reform legislation.

Value innovation requires remote monitoring and patient-centered services, potentially combined with real-world clinical decision support tools, founded on the principles of precision medicine, that help ensure the highest level of benefit for patients and health providers. These will require a combination of technologies, such as next generation DNA sequencing integrated with physician decision support, or remote-care monitoring sensors in the patient’s home. No one entity or company will have the scope of technical knowledge or acumen to define and evolve such a solution on its own, much less tailor it to the requirements of different regions and patient settings. Although we do see intellectual property and specific ways of working being created in these collaborations, we also see that the scope of problems is so broad and the value of new insights so large that the cost of limiting collaboration is greater than the commercial loss from shared intellectual property.

From the perspective of a life sciences company, current customers and suppliers may be the best collaborators. The more critical parties are to each other’s success, the broader the basis they may have to collaborate. Our experience suggests that risks are reduced and benefits maximized when collaborations have clear interests in redefining solutions and a history of successfully working together, resolving problems, and putting agreements into place.

Just as change in technological abilities—and in the market’s subsequent expectations—is a catalyst for collaborations, collaborations are a catalyst for change. R&D renovation was realized through collaborations across the continuum from earliest concept through to full commercialization; we believe that creating value for patients and healthcare systems will benefit from the same catalyst.

*EDITOR’S NOTE: Health care systems around the world have entered a period of profound change, one in which demographic, economic and technological forces have come together to call into question the paradigms that have governed the sector for decades. In Healthcare Disrupted: Next Generation Business Models and Strategies (John Wiley & Sons, 2016), Accenture executives Jeff Elton and Anne O’Riordan examine the ongoing shift from a system in which providers are compensated based on the volume of the products and services they render to one where remuneration is closely tied to patient outcomes. In the chapter reprinted here, the authors examine the trend toward greater collaboration among health care stakeholders and the implications of that transition for established ways of doing business and delivering care.