By Dan Lambert, the CEO of PathologyWatch. Dan earned his MBA from Harvard Business School and has led successful ventures and company exits.
If you are like 64% of American households, you own at least two Apple products. Since emerging out of Jobs’ garage 44 years ago as a startup, Apple’s valuation has reached as high as $2 trillion dollars, making it the second-largest company in the world. For hundreds of millions of people, an iPhone is the first thing they reach for in the morning and the last thing they set down at night.
How does one company become such an influential fixture in a global culture?
The impact of Apple’s success is largely credited to Steve Job’s vision for an integrated, seamless customer experience. Take iTunes, for example. Apple didn’t have the first MP3 player or the first place to download music or the most content. What Apple created was an integrated system catered to the customer’s need for an easy way to listen to music.
This was complicated to build. It required developing a device, sourcing content, building a digital store, negotiating prices and obsessively shaping a user experience around that integration. Apple’s focus on integration laid the groundwork for customer experience-centered digital transformation in all industries — by 2023, global spending on services and technologies to enable digital transformation is estimated to amount to $2.3 trillion.
In the healthcare space, my colleagues and I have the opportunity to create our own “Apple moment” of interdependence. While integrating healthcare systems has been difficult to date, the future is to integrate healthcare in the same way — where we pull together devices, systems and healthcare providers into a single amazing experience that begins with the patient. Whether it’s a hospital stay or, in my case, a digital diagnostic lab, the competitive advantages of interdependence in healthcare are significant.
The Competitive Advantage Of Interdependence
The Theory of Interdependence and Modularity provides a framework from which we can understand interdependence. When a product is modular, it includes standardized components that work together in codified ways, similar to a lightbulb and its socket. Alternatively, a product is interdependent when one part is made and delivered depending on the way another product is made and delivered. In the iTunes example, Apple had to develop all interdependent components in order to develop any of them. While adoption is slow, components must be made in-house rather than outsourced, and if they are not price-and-speed-optimized compared with modular counterparts, there are significant advantages. The unique interdependent components are optimized for function and reliability — for an optimal customer experience — that can create industries.
Salesforce is another good example. Founded with the idea of creating a customer relationship management cloud platform based on clicks and not code, Salesforce has expanded its interdependent products and services to the tune of trillions. Beginning with products such as Sales Cloud, Service Cloud and Community Cloud — built on Salesforce’s unique programming language, Apex — they then expanded into industry-based, add-on products such as Health Cloud and Manufacturing Cloud.
Health Cloud, for example, is Community Cloud with a health use case overlay. This interdependence has created not only a profitable business but also its own industry. In a recent study, International Data Corporation (IDC) forecasted that Salesforce and its partner ecosystem will create 4.2 million jobs and $1.2 trillion in business revenues between 2019 and 2024. Salesforce is driving massive gains for its partner ecosystem, which will see $5.80 in gains for every $1 Salesforce makes by 2024. You can view the revenue trajectory in this infographic.
As this example illustrates, once an interdependent product delivers reliably for customers, its components and processes begin to become standardized. At this point, suppliers can compete to deliver what have now become modules more cheaply and quickly (e.g., knock-off iPhone charging cords).
Benefits Of Interdependence In Healthcare
The interdependence model is a natural fit for healthcare. As subspecialties continue to mature, procedures, devices and technologies used to treat patients become increasingly disparate from one another. Payers — driven by rising costs and variation in quality medical care — are starting to designate certain hospitals as “centers of excellence,” where focus on certain conditions require integrated care and are expected to yield better outcomes, lower costs and greater value. At these centers of excellence, patients are selected to be treated for a specific condition, doctors specialize in one type of surgery, equipment is specialized and billing is focused on one type of surgery.
In that vein, PathologyWatch was created as a center of excellence for dermatopathology, where we aim to provide an optimized end-user experience for our dermatologists and integrated care for patients. Our end-users — dermatologists — needed an entire pathology system, not just a device or an expert. They wanted digital pathology, EMR integrations, the ability to show the case to the patient and an expert opinion (or sometimes multiple expert opinions).
This optimal use case requires bringing together a lab, specimen tracking software, digital scanners, viewing software, AI, expert pathologists, insurance contracts for reimbursement and supply chain capabilities. Most importantly, all of these components existed in some form before but had never worked before in a fully interdependent system.
The end result of this integration is a fantastic experience for both dermatologists and patients. Patients can see and understand cases, doctors receive clinical correlation and offices can potentially bill more for reviewing the pathology as a second reference. Slide turnaround time has increased by up to 75%, and staff in some clinics save one hour per day of manual work with the new integrated system. Some dermatologists are 75% more efficient in their slide review, and some clinics even see improved insurance coverage. Everyone wins because we connected a whole system of people, tools, devices and supply chains together into one comprehensive solution.
The healthcare industry is rapidly adopting a model of interdependence to fuel patient-centric digital transformation. This is how we can reduce the cost of healthcare in the US without sacrificing quality. And while further study is necessary to understand best practices for centers of excellence as well as potential pitfalls for an integrated system, I am cautiously optimistic that this new commitment to interdependence will yield better outcomes, lower costs and overall greater value in healthcare.
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