what does it take to outlast the disruptors?€¦ · a few closing thoughts on the eve of the d-day...

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What Does It Take To Outlast The Disruptors?

Building a New Strategy For A New Market

T h e 2 0 1 9 O P E N M I N D S S t r a t e g y & I n n o v a t i o n I n s t i t u t eJ u n e 5 , 2 0 1 9 | 1 1 : 3 0 a m - 1 2 : 0 0 p m

M o n i c a E . O s s , C h i e f E x e c u t i v e O f f i c e r , O P E N M I N D S

© 2019 OPEN MINDS

What I Learned This Week

1. Suicide is tenth leading cause of death in the U.S. – and there are very accurate

models for early identification of suicide risk

2. Suicide rates are on the rise – particularly among pre-teen girls

3. We have the first data tying consumer experience in I/DD to consumer use of health

care resources

4. Antipsychotic medications are used for both children with autism and children with

ADHD

5. 90% of children with autism have a co-occurring disorder and half have four or more

co-occurring disorders

6. There is a pending FDA approval of a technology for autism diagnosis

7. Primary care provider organizations are adding new service lines – from co-located

behavioral health services to hospital readmission prevention programs

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© 2018 OPEN MINDS© 2019 OPEN MINDS

What Is Disruption & Why You Should Care?

A disruptive innovation is an innovation that

creates a new market structure with a new

value chain - eventually disrupting existing

markets and displacing established market

leaders.

Disruption in a market is a process – and not

a single organization, event, or technology.

Disruptive innovations generally take hold in

the low-end and new-market spaces in a

market – spaces often ignored by market

leaders. Disruptive organizations offer

services that are novel, or simpler, more

convenient, and/or less costly.

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© 2019 OPEN MINDS

Where To Learn About Disruption? The Lessons Of Retail

The twin disruptors of retail

Both are entering the health and human service space

Walmart (low cost) Amazon (convenience)

© 2019 OPEN MINDS

The Walmart Effect On Retail

The Walmart Effect: Forcing smaller firms out of business and reducing wages for competitors' employees.

The Key: Scale and scope of Walmart’s buying power as a retail entity – allowing it to dictate the price it pays to wholesalers and having much lower price points than competitors.

Once a Walmart location opens, the lower prices and broad selection of merchandise tends to draw consumers away from other businesses. These businesses see profits fall – forcing them to make cost-cutting decisions and (for many) eventually going out of business.

Even if Walmart decides to close/leave a location, its market impact remains.

© 2019 OPEN MINDS

The Amazon Effect On Retail

The Amazon Effect: Moving consumer shopping to a convenient online platform.

The Key: People can easily get products and services anywhere with an internet connection – location is not an issue and volume is reduced in physical locations.

Using this platform, consumers can find what they are looking for with little effort.

© 2019 OPEN MINDS

What Can We Learn From the Organizations In Retail That Survived The Disruption of Walmart & Amazon?

They use customer data to identify and evolve

products

They focused on the customer experience—

overall, online, in store—and integrated that

experience

They leveraged technology to remain competitive – the low

cost of cloud technology made that possible

They developed name recognition in their niche

They identified their “true value” to customers –specializing in a niche

They created a future product offering in a

defendable niche

They abandoned niches where they weren’t

competitive and didn’t have value compared to

the competition

© 2019 OPEN MINDS

The Hybrid Model• Physical locations and online – with low cost and

convenience – is likely to be the winner in the long-run.

The Elephant Effect

• Even minor gains by the two retailing behemoths can have a profound effect on smaller rivals.

The Squeezed Middle

• “It’s the medium-sized retailers that are caught in the middle, trying to serve broader constituencies without the scale of the bigger players.”

The Product Life Cycle Lesson

• In order to survive, organization’s leaders must be willing to see some business units die.

The Innovation Dilemma

• Every organization that has tried to launch and manage mainstream and disruptive businesses within a single organization failed.

The Big Takeaway From The “Survivors” Of Retail Disruption By Walmart & Amazon

© 2019 OPEN MINDS

What Are Key Disruptive Forces In Health & Human Services?

1. Transportation companies facilitating in-home services – Uber, Lyft, UPS

2. Performance-based purchasing of pharmaceuticals (UPMC Health Plan, State of Oklahoma)

3. Amazon’s investment in PillPack – what else will they (and others) sell online?

4. Pharmaceutical companies entering the tech-enabled service space (Otuska and MyCite, Sandoz and Pear Therapeutics)

5. Payers limiting consumer choice for specialty services to “Centers of Excellence (WalMart)

6. Chains of low-cost, convenient service centers (CVS/Aetna)

7. Health plans paying for, and being reimbursed for, social services (Kaiser, United, Humana –CMS/Medicare rule changes)

8. “Netflix” pricing model for pharmaceuticals – and what else? (State of Louisiana, State of Washington)

9. Augmented-intelligence companions (Amazon’s Alexa, Jibo, Paro)

10. National chains for high-value specialty providers winning national contracts with payers (Clean Slate, Virtua, SurgCenter Development)

11. Smart homes (Google-powered AI in health care – Nest & Google Home)

12. The expansion of virtual care (United/Optum – telehealth expansion)

© 2019 OPEN MINDS

What Is Being Disrupted In Health & Human Services?

Primary care and care

coordination“Talk” therapy

Reimbursement models

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Remaking Primary Care – Merging With Care Coordination

1. Health plans with virtual primary care (Humana, Oscar)

2. Primary care at home (Wellcare, Humana)

3. Retail chains – 1,100 locations, offer specialist consults

virtually, partnership with VA

4. Backward integration of primary care functions in

health plans – Aetna, Kaiser, United/Optum, etc.

Specialist services provided via virtual care within

primary care model

Augmented intelligence’ can support basic primary care

functions –

• “Assess, prescribe, refer”

• “Care coordination, health education, health promotion”

Growing payer preference for "specialty" primary care

(and specialty medical homes)

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“Therapy” Is Evolving

Consumer's access to treatment and the treatment system will be determined by the health care

coverage, their health plan choice, and their personal

income.

Mental health treatment and other ‘therapy’ will happen within

integrated systems of care.

Consumers will have more limited choices of therapies - of

provider organizations, professionals, and treatment

models.

Tech-enabled treatment will be the rule, rather

than the exception.

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© 2019 OPEN MINDS 13

Business Model TransitionFor Service Provider Organizations

Payer Preference Was Pay For Cost Or Volume Payer Preference Is Pay For Value

What is paid for is

good for the

consumer - and

doing more is the

business model

Giving the

consumer (and their

payer) what they

want and need is

the business model

Good outcomes

delivered cost

effectively

A revolution in

performance

management required

© 2019 OPEN MINDS

The Changing Preferences Of Customers - & New Market Options

“Specialty” service

provider

organizations -

regional and national

Tech-enabled direct-

to-consumer

alternatives

Tech-enabled

specialty solutions for

primary care and

acute care settings

“Better

value”

alternatives

are

emerging Health plans and

consumers want to buy

services in new

‘packaging’

Reimbursement rates

for traditional services

on the decline

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1. Create a new strategic identity –

and sell it!

What will your organization be in the

future? Its reason for being? The

customer you serve? The value it

provides? Commitment of your

customers and employees is critical.

2. Treat your legacy as an asset

and sell it! Divest of what doesn’t

fit with the new identify – use the

income to fund the future.

3. Remember what “value” means!

“Value” includes customer’s wants, not

necessarily what they need (customer

metrics)

“Value” includes cost reduction

(strategic quality)

4. Master the pivot from pilot to

scale – promptly! Test new practices

in an intensive, experimental, time-

limited startup-style manner. Pick the

approaches that work and rapidly

implement them throughout the larger

organization (complexity

management)

How To Survive The Disruptors?



and sell it!













metrics)


(strategic quality)








management)



A few closing thoughts on the eve of the D-Day anniversary. . .

Nourish your hopes, but do not

overlook realities.Winston Churchill

Neither a wise man nor a brave

man lies down on the tracks of

history to wait for the train of the

future to run over him. Dwight D. Eisenhower

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Into Business AdvantageOPEN MINDS market intelligence and technical assistance helps over 550,000+

industry executives tackle business challenges, improve decision-making, and

maximize organizational performance every day

www.openminds.com n 15 Lincoln Square, Gettysburg, Pennsylvania 17325 n 717-334-1329 n [email protected]

what does it take to outlast the disruptors?€¦ · a few closing thoughts on the eve of the d-day...

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