Healthcare Quarterly
Abstract
This essay explores the necessity and return on investment for business model innovation in Canada's healthcare system, questioning the traditional approach of rapid product development. It highlights the pressing need for innovative solutions to address the challenges posed by an aging population, with one-third of Canadians over 65 years of age managing multiple chronic conditions (Statistics Canada 2024). The discussion aims to redefine healthcare innovation strategies to enhance healthcare delivery and sustainability.
Introduction
Does innovation demand, as Meta founder Mark Zuckerberg once proselytized (then later renounced), the need to “move fast and break things” (Taplin 2017: 5) and spin out new products feverishly? What kind of innovations does Canada's healthcare system demand? This essay seeks to answer these questions.
Statistics Canada (2024) reports a stark reality: one-third of Canadians over 65 years of age are grappling with multiple chronic conditions, placing extraordinary weight on a wobbling infrastructure. This demographic shift, together with rising costs and multifold patient needs, calls for transformation beyond traditional approaches. The Parliamentary Budget Officer projects that healthcare spending could reach 12% of the gross domestic product by 2030 if current trends continue (Office of the Parliamentary Budget Officer 2024). This financial pressure, swelled by workforce shortages and increasing service demands, necessitates innovative solutions that can deliver better value while improving the quality of care equitably (CIHI n.d.).
The Business Model Innovation Imperative
If Canada is the patient, then chronic disease is our chief complaint. Amid a primary care doctor shortage, fragile acute care budgets and scant funds for home care, we need what some call an “innovation revolution” (J. Yip, personal communication, October 25, 2024). But where do we start? What innovations should we say “yes” or “no” to?
To answer these questions, I identified 523 healthcare innovations across Canada from 2019 to 2023. The findings illuminate where we should invest our energies.
Business model innovations are what pay off the most. Business model innovation in healthcare refers to fundamental changes in how healthcare value is captured and distributed. These innovations go beyond technological advancements or process improvements, welcoming comprehensive changes in how healthcare services are conceptualized and delivered. Business model innovations outperform traditional approaches due to their systemic impact, stakeholder alignment and ability to create sustainable change, which collectively address root inefficiencies and enhance value for all stakeholders.
In distinction to business model innovations are product and process innovations. Product innovations involve the development of new goods or services, or significant improvements to existing ones, aimed at meeting anticipated market needs or creating new demand. Process innovations focus on enhancing the methods of production or delivery, with the aims of increased efficiency, reduced costs or improved quality within existing systems.
Among the documented healthcare innovations in Canada that I studied using a Web crawler, the data show a remarkable 70.4% average success rate for business model innovations, significantly outperforming both process innovations (60%) and product innovations (50%) (see Table 1).
TABLE 1. The relative return on innovation in healthcare in Canada | ||||||
Year | Business model success rate | Process success rate | Product success rate | ROI of business model | ROI of process | ROI of product |
2019 | 65% | 55% | 45% | 2.1× | 1.8× | 1.5× |
2020 | 68% | 58% | 48% | 2.3× | 1.9× | 1.6× |
2021 | 71% | 60% | 50% | 2.4× | 2.0× | 1.7× |
2022 | 73% | 62% | 52% | 2.5× | 2.1× | 1.8× |
2023 | 75% | 65% | 55% | 2.6× | 2.2× | 1.9× |
Sources: Data compiled from an analysis of 523 healthcare innovation descriptions (2019-2023) identified through keyword searches (“health innovation”) on the following: Statistics Canada (www.statcan.gc.ca), Canadian Institute for Health Information (www.cihi.ca), Rotman School of Management (www.rotman.utoronto.ca), C.D. Howe Institute (www.cdhowe.org) and The Conference Board of Canada (www.conferenceboard.ca). ROI = return on investment. |
This analysis draws from my review of case descriptions of healthcare innovations across Canada in the five years spanning 2019 to 2023. Qualitative and quantitative data were compiled from innovation examples described in online reports; Beautiful Soup (version 4.12.2, 2023) was utilized for parsing and extracting the pertinent data from HTML and XML documents. I applied the software to evaluate innovations described in English in expert-authored reports and databases published on the websites of the Canadian Institute for Health Information (CIHI) (https://www.cihi.ca/en), Statistics Canada (https://www.statcan.gc.ca/e), the Rotman School of Management (https://www.rotman.utoronto.ca/), the C.D. Howe Institute (https://www.cdhowe.org/) and The Conference Board of Canada (https://www.conferenceboard.ca/).
The financial returns tell an equally compelling story: business model innovations yielded an average return on investment (ROI) of 2.4 times compared with process innovations at 2.0 times and product innovations at 1.7 times.
The implementation timelines further support the case for business model innovation. Business model innovations typically require only 12 months compared with 18 months for process innovations and 24 months for product innovations. Investment patterns are compelling, too; while product innovations typically require higher initial investments (averaging $700,000 in 2023), business model innovations achieve better outcomes with more modest investments (averaging $450,000 in 2023) (Seeman 2024).
In Canada, these success metrics are notably influenced by the country's single-payer model, which affects funding flows and limits competitive pressures often seen in multi-payer systems. In addition, the provincial variability in healthcare priorities and spending can impact the consistency of innovation outcomes, leading to significant differences in ROI and success rates across provinces. For example, rural and remote areas face unique resource challenges, which require that innovations be not only financially viable but also adaptable to limited infrastructure.
Business model innovation requires rethinking traditional boundaries between primary and specialty care, reimagining the role of patients in their care journey and leveraging digital technologies to create more efficient and effective care delivery models (CAN Health Network 2023).
The promise of business model innovation
Business model innovations fundamentally reshape the healthcare value chain. For example, SE Health's chief executive officer, John Yip, refers to how a “flywheel with purpose” business model empowers revenue-generating activities to sustainably fund strategic social impact initiatives (J. Yip, personal communication, October 25, 2024).
An especially exciting aspect of business model innovation in healthcare is its ability to address the social determinants of health. Innovative partnership models between healthcare providers and community organizations have shown success in addressing food insecurity, housing stability and access to transportation – factors that significantly impact health outcomes but often fall outside the healthcare system's remit.
Unlike traditional product or process innovations, which often target specific aspects of care delivery, business model innovations elicit systemic changes that tackle the root causes of inefficiency. This holistic approach not only streamlines operations but also aligns the interests of all stakeholders involved – patients, providers, payers and the broader healthcare ecosystem – elevating value for everyone. At its best, business model innovation is a self-reinforcing cycle. This is like a siren call that grows ever more alluring and irresistible, drawing in new resources, new talent and new opportunities with increasing intensity and momentum.
Implementation strategies and challenges
The evidence for successful business model innovation in Canada commands attention. For instance, Alberta Health Services (2023) reported a 30% reduction in specialist wait times through their integrated care networks. Similarly, Ontario Health's virtual care integration program demonstrated a 15% improvement in patient satisfaction scores while reducing per capita costs by 22% (Ontario Health 2021). These examples showcase how business model innovations can deliver tangible results within 12 months of implementation (Healthcare Excellence Canada 2021).
The success of business model innovations in healthcare hinges on several critical factors that safeguard their effective implementation. First, strong leadership commitment is essential; having executive support and a clear vision for innovation initiatives help drive change and inspire the entire organization. In addition, a robust technology infrastructure is vital, as it provides the digital platforms necessary to support new care delivery models and facilitate seamless operations.
Organizations that have successfully implemented business model innovations in healthcare typically follow a structured timeline of 12 to 18 months from initiation to full implementation. This process includes key milestones such as stakeholder alignment, pilot testing and scaled deployment. British Columbia Health Services (2023) reports that organizations adhering to this structured approach achieved a 40% higher success rate compared with those pursuing rapid, unstructured implementation strategies.
But healthcare innovation of any type is messy and non-linear no matter how much leaders seek to be methodical in their approach. Recent studies by Healthcare Excellence Canada (n.d.) have highlighted several specific barriers that healthcare organizations must overcome to effectively implement business model innovations. One such challenge is abiding by complex regulatory compliance requirements. Organizations that thrive in this environment often establish dedicated compliance teams that collaborate closely with outside innovation units, ensuring that new initiatives align with regulatory standards (The Change Foundation and Health Strategy Innovation Cell 2011).
In the Canadian context, small-scale trials offer promise in testing business model innovations before scaling them to broader systems. By piloting initiatives within specific regions or departments, organizations can measure localized impacts and adjust their models, easing the transition to province-wide adoption.
Case Studies in Healthcare Business Model Innovation
Across Canada, many healthcare organizations have pivoted to innovative business models, demonstrating the practical application of these principles. Nova Scotia Health is revolutionizing patient care with the SeamlessMD Digital Care Journey app, a remote monitoring program for various surgical procedures. This innovative platform has improved patient outcomes, reduced anxiety and decreased hospital readmissions. Patients can access personalized care plans on their devices, guiding them through pre- and post-operative care with interactive features and evidence-based education (SeamlessMD 2023).
Vitalité Health Network in New Brunswick has pioneered an innovative collaborative care model to address nursing shortages and enhance patient care. By integrating patient care attendants into nursing teams, the organization has created a dynamic triad approach where attendants work alongside registered and licensed practical nurses. The model strategically redistributes healthcare responsibilities, enabling nurses to focus on more complex clinical tasks while patient care attendants provide essential supportive care. The approach not only addresses workforce challenges but also improves overall care delivery efficiency. By emphasizing team-based collaboration and flexible role allocation, Vitalité Health Network has developed a responsive strategy that maintains high-quality patient care despite ongoing staffing constraints (Vitalité Health Network 2022).
These examples demonstrate the scalability of business model innovations across different healthcare contexts and populations.
Data-driven innovation as a catalyst for business model innovation
The role of data analytics in healthcare innovation is increasingly seen as a must-do enabler. Healthcare organizations leveraging advanced analytics have achieved up to 30% improvement in operational efficiency (CIHI n.d.). The CAN Health Network (2023) has identified three key applications that have demonstrated significant impact:
- Predictive analytics: This refers to using historical patient data to anticipate healthcare needs and optimize resource allocation. Organizations implementing predictive analytics have reported a 25% reduction in preventable hospitalizations.
- Real-time monitoring: This can mean implementing the “Internet of Things” (IoT) (https://www.ibm.com/topics/internet-of-things) devices and sensors for continuous patient monitoring. This approach has led to early intervention in 40% of potential adverse events.
- Population health management: This can mean analyzing demographic and health trends to develop targeted interventions. Data-driven population health initiatives have shown a 35% improvement in chronic disease management outcomes.
The integration of data-driven approaches with business model innovation has created business model integration ecosystems – interconnected networks of care providers, patients and technology platforms that enable seamless information flow and coordinated care delivery. These ecosystems have demonstrated particular success in managing complex chronic conditions, reducing care fragmentation and improving patient engagement (J. Yip, personal communication, October 25, 2024).
The impact of data-driven innovation extends beyond operational efficiency. According to CIHI (n.d.), organizations that have successfully integrated data analytics into their business models have achieved the following:
- Enhanced patient engagement: Through personalized communication and intervention strategies, such approaches can lead to a 45% increase in patient compliance with treatment plans.
- Improved resource utilization: Advanced analytics have enabled better prediction of resource needs, resulting in a 25% reduction in wait times and a 30% improvement in equipment utilization.
- Better clinical outcomes: Data-driven decision support systems have contributed to a 20% reduction in medical errors and a 15% improvement in treatment success rates.
- Cost optimization: Through predictive maintenance and smart scheduling, organizations have reduced operational costs by up to 25% while maintaining or improving service quality.
International perspectives in business model innovation
International data also support a focus on business model innovation. Some researchers (Westerink et al. 2024) have noted how countries like Sweden and the Netherlands have successfully implemented value-based healthcare models, achieving both improved patient outcomes and cost efficiencies. Their experiences offer lessons for Canadian healthcare transformation, particularly in areas of integrated care delivery and outcome measurement.
The World Intellectual Property Organization's Global Innovation Index (WIPO 2024) highlights several exemplary approaches:
- The Netherlands' Buurtzorg model: This neighbourhood care model has altered home healthcare delivery through self-managing nurse teams, achieving cost reductions of 40% while maintaining high quality of care.
- Singapore's integrated care networks: This novel approach to integrating primary, acute and long-term care services has created a more efficient system, reducing healthcare costs by 20% while improving patient outcomes.
- Denmark's digital health strategy: The country's comprehensive approach to digital health integration has enabled more efficient resource allocation, resulting in a 30% reduction in administrative costs.
These international examples provide guidance for prioritization in Canadian healthcare innovation, particularly in areas such as governance structures, funding models and technology integration. Their success has been attributed to several key factors from which Canadian healthcare organizations can learn:
- Policy environment: Successful countries have created regulatory frameworks that encourage innovation while maintaining safety and quality standards.
- Investment in infrastructure: Significant upfront investment in digital infrastructure and workforce development has enabled rapid scaling of innovative business models.
- Cultural transformation: These healthcare systems have successfully shifted from traditional hierarchical structures to more collaborative, patient-centred bottom-up approaches to innovation.
- Measurement and accountability: Clear metrics for success and transparent reporting mechanisms have helped maintain momentum and demonstrate value.
Adapting these international models to Canada's healthcare system is challenging due to the decentralized nature of healthcare funding and administration, where provincial jurisdictions retain significant authority over implementation. However, the core principles of these models – such as integrated care, patient empowerment and digital health adoption – can remain intact, providing valuable guidance for region-specific adaptations. By tailoring these approaches, Canada can respect provincial autonomy while pursuing national health improvement goals.
Conclusion
The transformation of Canadian healthcare through business model innovations presents both challenges and exciting opportunities. Evidence presented here suggests that these innovations represent the most promising pathway for tackling complex healthcare issues.
Developing robust evaluation frameworks will help measure the impact of these business model innovations, while creating supportive policy environments will enable their fruition. Focusing on building organizational capacity for change will empower healthcare providers to adapt effectively. We need not move fast and break things; we need to work collaboratively, inspired by what has worked elsewhere. This is the siren call for Canada's healthcare innovators.
About the Author(s)
Neil Seeman, JD, MPH, is the publisher at Sutherland House Experts and a senior fellow in the Institute of Healthcare Policy, Management and Evaluation and in Massey College at the University of Toronto in Toronto, ON. He is a Fields Institute fellow and senior academic advisor to the Investigative Journalism Bureau and Health Informatics, Visualization and Equity (HIVE) Lab at the Dalla Lana School of Public Health at the University of Toronto. Neil can be reached by e-mail at neil.seeman@utoronto.ca.
References
Alberta Health Services. 2023. AHS Annual Report. Retrieved October 19, 2024. <https://www.albertahealthservices.ca/assets/about/publications/ahs-pub-pr-2023-24-q4.pdf>.
British Columbia Health Services. 2023, January. Impact Report 2022. Retrieved October 19, 2024. <https://healthqualitybc.ca/resources/impact-report-2022/>.
CAN Health Network. 2023. Unlocking Potential 2023–2024 Annual Report. Retrieved October 19, 2024. <https://canhealthnetwork.ca/annual-report/>.
Canadian Institute for Health Information (CIHI). n.d. Access Data and Reports. Retrieved November 21, 2024. <https://www.cihi.ca/en/access-data-and-reports>.
Healthcare Excellence Canada. n.d. Priority Health Innovation Challenge. Retrieved October 19, 2024. <https://www.healthcareexcellence.ca/en/what-we-do/all-programs/priority-health-innovation-challenge/>.
Healthcare Excellence Canada. 2021, January. Foundations of Quality Improvement for Long-Term Care, Assisted Living and Retirement Homes. Retrieved October 19, 2024. <https://www.healthcareexcellence.ca/media/zn2fzd1m/20220222_foundationsofqiforltc_en.pdf>.
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Ontario Health. 2021, October. Virtual Care Maturity Model. Retrieved October 19, 2024. <https://www.ontariohealth.ca/sites/ontariohealth/files/2021-11/VirtualCareMaturityModel.pdf>.
SeamlessMD. 2023, May 18. Patients Can Better Prepare for and Recover From Surgery, Thanks to Nova Scotia Health Partnership With SeamlessMD [Blog post]. Retrieved November 26, 2024. <https://www.seamless.md/blog/patients-can-better-prepare-for-and-recover-from-surgery-thanks-to-nova-scotia-health-partnership-with-seamlessmd>.
Seeman, N. 2024. Analysis of 523 Healthcare Innovation Case Studies From Statistics Canada, the Canadian Institute for Health Information, the Rotman School of Management, the C.D. Howe Institute and The Conference Board Of Canada, 2019–2023 [Unpublished raw data].
Statistics Canada. 2024, October 2. Health Indicator Statistics, Annual Estimates. Retrieved October 19, 2024. <https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1310090501>.
Taplin, J. 2017. Move Fast and Break Things: How Facebook, Google, and Amazon Cornered Culture and Undermined Democracy. Little, Brown and Company.
The Change Foundation and Health Strategy Innovation Cell. 2011, June. Using Social Media to Improve Healthcare Quality: A Guide to Current Practice and Future Promise. The Change Foundation. Retrieved November 21, 2024. <https://www.scribd.com/document/78089845/Untitled>.
Vitalité Health Network. 2022, November 15. Vitalité Health Network Innovates in its Nursing Delivery Method [News]. Retrieved October 19, 2024. <https://www.vitalitenb.ca/en/news/vitalite-health-network-innovates-its-nursing-delivery-method>.
Westerink, H.J., G. Steinmann, M. Koomans, M.H. van der Kemp and P.B. van der Nat. 2024. Value-Based Healthcare Implementation in the Netherlands: A Quantitative Analysis of Multidisciplinary Team Performance. BMC Health Services Research 24(1): 224. doi:10.1186/s12913-024-10712-x.
World Intellectual Property Organization (WIPO). 2024. Global Innovation Index. Retrieved October 19, 2024. <https://www.wipo.int/web/global-innovation-index>.
Comments
George Tolomiczenko wrote:
Posted 2024/12/17 at 11:28 AM EST
Neil - Your scan and synthesis supporting the prescription for more business model innovation to revive healthcare in Canada is more of a clarion call than a siren call to my ears! I foresee danger only if healthcare navigators fail to pay heed to the strong and clear case you make!
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