Becker's Hospital Review

FINANCE STRATEGY AND INNOVATION 31 "If everything in Philly got separated and there was an earthquake and the only the le was JAZ, [it would be] self-sufficient," Dr. Klasko says. e JAZ is one of a few innovation centers that features its own executive leadership and administration. Others in- clude organizations like Cleveland Clinic Innovations and Pittsburgh-based UPMC Enterprises. While not every hospital or health system can create a standalone in- novation arm, having dedicated leadership solely focused on innovation efforts, like Dr. Wright, is an important step. e HIMSS State of Healthcare Inno- vation 2014 survey found just 10 percent of organizations with revenue up to $250 million had chief innovation officers. Comparatively, 64 percent of provider or- ganizations with revenue exceeding $5 bil- lion had someone in that role. Carolinas falls in this latter group of health systems. (It reported $8.7 billion in net revenue for the year ended Dec. 31, 2014). e system institutionalized its commitment to innovation by creating Dr. Wright's position in 2012. Dr. Wright says individuals in such roles are critical to in- novation efforts because their entire life's work is focused on bringing about this change. "It's our day job to make this work," Dr. Wright says. "If [innovation] isn't your day job, you can't help but go back [to your day job]. If you're a nurse manager on a particular floor, you go back to keeping heads in beds and keeping staff. As much as you like innovation, you can't find the time to do it." Fear of failure To succeed, organizations first have to fail, but healthcare is a highly regulat- ed, protocol-driven industry where fail- ure is generally a negative outcome. at being said, pain and failure in innovation shouldn't be avoided; rather, Mr. McCar- thy says failure is integral to the innovative process and should be discussed, embraced and leveraged into innovation efforts. "e word 'failure' is really important to build into the lexicon of innovation," Mr. McCarthy says. "I think the people who are [afraid of ] using [the word 'fail- ure'] are forgetting it's tied to success. If we don't use those two words together, then we are creating a false sense of what failure is about." To Mr. McCarthy, allowing failure — that does not affect or harm patients, of course — clears the path to take the appro- priate risks that innovation requires. He says the earlier someone fails, the earlier someone can succeed in innovation. "We fail a lot very early and very cheaply and we keep pivoting, pivoting, pivoting and learning and pivoting until we come up with a solution that fits our environment," Mr. McCarthy says. Dr. Wright says people are oen put off by failure in healthcare, an environ- ment that typically rewards people for success. So, Carolinas awards individuals for "smart failure" as a means to encour- age innovation and the inevitable failure that accompanies it. e award recogniz- es those who failed but then learned from their mistakes. Carolinas' pharmacy department re- cently won the award for trying a new process around medication distribution. A few years ago, Carolinas' pharamacy de- partment won the award for trying a new process around medication distribution. "eir original plan did not deliver upon its expectations. But they learned from that, recovered, rebuilt and moved on," she says. Only looking inward Healthcare certainly isn't the only industry going through a constant in- novation evolution. And lessons learned elsewhere can be largely applicable in this space. A 2013 Harvard Business Review arti- cle said a common source of this "blind- ness" to outside industries is that leaders tend to believe their industry's challenges are unique. According to the article, this belief is more common in healthcare than in other industries, so healthcare leaders may resist learning from the example of non-healthcare organizations. Dr. Wright agrees with this analysis. She too finds healthcare to be a rather tight vertical with minimal crossover, which isolates leaders from some of the best thinking. For example, Dr. Wright finds many parallels between issues facing Carolinas faces and the local energy provider, which is also a highly regulated industry. "When their chief innovation officer talks, you would think we are talking about the same thing," Dr. Wright says. "ey're trying to deliver something in a highly reg- ulated environment, and so are we. ey have to touch thousands of customers a day, and we touch thousands of patients a day." Dr. Wright says many individuals and organizations aren't used to crossing industry boundaries, and so they are un- aware of the "rich resource" these counter- parts provide. Mr. McCarthy agrees, saying one of healthcare's biggest innovation setbacks is only working and looking internally. "One of the most important [elements] of the innovation function is to look out- side of the organization, outside of the in- dustry to places you would never imagine looking normally," he says. "[Innovation] is both an inward and outward function." Final thoughts Innovation in healthcare is slowly becoming the norm, as evidenced by the Pricewaterhouse-Coopers survey findings demonstrating the vast majority of health- care leaders view innovation as critical to their organization's success. Players just entering the innovation game can take a page from the early mov- ers and shakers and learn from their mis- takes. Instead of reinventing the wheel of innovation, the industry is better off build- ing upon the best practices and models of those who came before. n

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