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Cleveland Clinic’s Former Chief Innovation Officer: Why Health Systems Must Become Innovation Test-Beds

January 24, 2016
by Mark Hagland
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The Cleveland Clinic’s former chief innovation officer, Thomas Graham, M.D., shares his perspectives on the need for the leaders of patient care organizations to become test-beds for technological innovation

Earlier this month, McGraw-Hill and the Cleveland Clinic announced the publication of a new book, Innovation the Cleveland Clinic Way: Transforming Healthcare by Putting Ideas to Work, by Thomas Graham, M.D., an orthopedic surgeon who until December had been chief innovation officer at the Cleveland Clinic organization since 2010. This month, he became chairman of the Lake Nona Institute in Florida.

According to the press release issued earlier this month, “The book offers a blueprint that businesses and organizations – of any size and in any industry –can follow to create their own winning culture of discovery and innovation. Readers,” the press release says, “will learn about: Cleveland Clinic’s Six Degrees of Innovation; the powerful “INVENT algorithm for speeding new ideas to market; why creativity is overrated and why collaboration is not; the best ways to critique invention, reject ideas, calm investors and keep everyone striving toward new discoveries.” Innovation the Cleveland Clinic Way is the third in the publishing company’s “Cleveland Clinic Way” series, which began with The Cleveland Clinic Way: Lessons in Excellence from One of the World’s Leading Healthcare Organizations, by Cleveland Clinic president and CEO Toby Cosgrove, M.D. in 2014, and continued in 2015 with Service Fanatics: How to Build a Superior Patient Experience the Cleveland Clinic Way, by James Merlino, M.D.

Shortly after the announcement of the new book’s publication, Dr. Graham spoke with HCI Editor-in-Chief Mark Hagland about the book and its implications for the U.S. healthcare industry. Below are excerpts from that interview.

What led you to write this book?

We arrived at a time where the development of our basic architecture or infrastructure to perform innovation, which we literally define as putting ideas to work, or take transcendent thought and put it into practice, it had gotten to a level of gravitas and breadth, that we were being sought out by essentially everybody else, not only in healthcare, but in other industries, to tell them how we do it. And we maintain that innovation is something that can be democratized and spread; it shouldn’t’ be thought of as just a single institution’s competitive advantage; it’s a platform for collaboration. So we sought to share our learnings not only from nine decades of our existence, but especially from the past two decades, in which we’ve created Cleveland Clinic Innovations, our innovation engine. So it just seemed that our level of maturity and trackable outcomes coincided with the clamor from other healthcare organizations and even organizations outside healthcare, to receive learnings. And I was very proud to be the person to be selected to tell the story.


Tom Graham, M.D.

You’re an orthopedic surgeon, correct?

Yes, a practicing orthopedic surgeon and a leader at Cleveland Clinic until last month. Back in the mid-1990s, I was trying to build an identity in my specialty and trying to contribute academically, and I went to our CEO at the time, Fred Loop, and asked him how innovation was handled. We were a few years after the Bigh-Dole Act… I credit people like Joe Hahn, Dr. Loop, Dr. Cosgrove, with enabling innovation. We had to find a way to make sure we could create development. And that was the uniqueness to which Cleveland Clinic was committed. I had left CC in 2000 to become CEO of the National Hand Center. It was starting to identify and help gestate the intellectual assets, and I returned in 2010. So just imagine, theretofore, ideas could just have lain fallow. Or the classic—for an orthopedic surgeon—you couldn’t wait to meet with the detail man, the representative of an orthopedic implant company, you saw an implant fail three times in a row, and you knew how that could be fixed. So we sought to bring the appropriate infrastructure into the walls of the clinic, to not only protect but build infrastructure, and work with the investment community. So it kind of aggregated. And it resulted in the success we’ve enjoyed—76 spinout companies, thousands of patent applications, probably $80 million returned to our on-campus inventors. Our state has been a great partner. And the only net new job-creating companies in our state have been among companies less than five years old. And that’s true nationwide, too.

So I just think that innovation is a core principle that almost any institution or organization should be seeking now to be part of its industry.

How do you see innovation in the context of being an imperative in U.S. healthcare?

I have nearly 50 patents already myself. Yet at the beginning part of my career as an orthopedic surgeon, the philosophy in this industry was that we’d take a shiny metal object [a promising technological breakthrough] and say, let’s just gold-plate it. But all that did was possibly affect the cost, right? What we’re looking to do now is to take the lead towards population health, and towards value-based care, and be pioneers of value-based innovation. And in its simplest form, it’s solving problems faster, and frankly, better. So we in the innovation community are involved in strategic innovation, one of the six degrees of innovation, as opposed to the “lightning strike,” episodic type of innovation. And we’re recognizing that if innovation is going to add significant cost to care delivery, it’s probably never going to flower. So cost-based value needs to be part of the equation. Now, that statement sometimes gets misinterpreted, in the content of orphan drugs, that kind of thing. But that’s not what we’re talking about here. We need to improve access, quality, and cost. So what is any new thing you’re talking about, going to do, to affect any of these three dials? And innovation is a long, high failure rate to success, endeavor. And if something isn’t going to be translational, it’s not going to cut it these days.

In other words, we as an industry need to rethink the value element in innovation, correct?

Yes. I’m on a one-man campaign to disabuse people of the idea that medical innovation is necessarily something that adds cost. And it is always easy to track the cost of the development of an innovation. You can figure that out. You can figure out how much it costs to develop something like innovation; but what you can’t’ figure out is how many lives you’ll save, or how much cost you’ll save in terms of care delivery. And the innovation community is sensitive to that issue, and I made sure in writing this book, to talk about that, but also to advocate for innovation. Because innovation goes in cycles. There’s enthusiasm, but sometimes it wanes. So there’s where I credit Cleveland Clinic, because we took something that is arduous, and we stuck with it, we resourced it, and it’s paid dividends, and now we’re willing to share it. Truthfully, we’ve put our “secret sauce” into the book. We’re not going to sequester it, because it’s going to raise all boats. We’ve invited partners to share in this. I don’t know that we as a population and citizenry, as an industry and as a whole economy, we can’t afford a journey of several decades. We need to get everyone involved in this together, today. If we’re not helping figure things out to save money and improve healthcare, we’re failing. I love that vendors are becoming partners, and that different kinds of organizations are collaborating. And through sharing ideas and best processes and practices to bring those ideas to fruition—well, we should only collaborate.

What’s going to happen in the next five years in this whole area of solutions development and technological innovation, industry-wide?

I think we’ll find that the disintermediation of the investment community cannot continue. We need support at the most organic stage of innovation. And yet that I the stage at which the industry and the investment communities, have fled. Everybody uses the term the “valley of death,” which I think is over-used and misunderstood—same thing with “early-stage investment.” When you’re talking about innovation in the way in which we grind it out, that’s organic-stage. And that’s where it’s difficult—the money we need is the suborganic, or initial-level funding. I hear “too early, too risky,” all the time. But ideas have to start somewhere. And one of these days, the venture community, which has completely evaporated from us—that situation has to change.

So you’ve got to advocate for yourself. So we have to get that message out. So that’s why we’re looking for other resources—the state of Ohio, for instance. The Third Frontier and JobsOhio, have helped. But the idea is, get the word out, look for other partners, and we have to do our part. So don’t say, no, Dr. Jones, don’t come to me with a napkin, come to me with a prototype. Don’t do that. But I’ve accessed the world of financial engineers. So growing the collaboration grows the portfolio. You’re spreading the risk. And so we’re increasing the shots on goal, which means you’re increasing your batting average and maybe even your slugging average. So will the investment community stop saying, “too early, too risky,” stop saying, “We don’t write checks that small”? because on any given day, we have a barrel full of things that need early-concept money—say, $50,000. We have a bucket-full of things that need $100,000. We have projects that need more money than that, smaller numbers of such projects. That’s the pyramid of projects. And that’s innovation. Not every idea you have ends up being the next big thing. It’s tough to predict. And I spend a lot of my time now looking at early predictive analytics for outcomes of innovation.

A couple of game-changers: everybody in the ecosystem, providers, vendors, investors, government, have to come together to solve the capital gap. Second, some of us are working very hard to streamline innovation. We’re trying to figure out ways to have better predictive analytics for eventual outcomes, including financial outcomes, lives saved, derivative products, etc. I’m working very hard on developing that type of platform.

Clearly, you believe that more large health systems should get into this?

Yes, I believe that the logical crucibles for the type of innovation that will move the needle in healthcare transformation, is typically occurring in healthcare facilities and in research universities. So I believe it’s not only an opportunity, but almost a responsibility. And if you think about it, here we are in a day when all the talk is about clusters. Well, the best way to aggregate smart people is to bring them into gatherings together. We want to find these interdependent communities with nuclei of creative thought; and they’ll mostly be in healthcare facilities and academic research centers. And we have to tell industry, come and join us at the beginning of the journey. Innovation is not acquisition. We need them to come and join us at the early stages of innovation, so there’s always a pipeline.

 

 


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