Tuesday, January 27, 2015

Data Analytics Can Save Billions in Healthcare

By Denise Fletcher
Vice President and Chief Innovation Officer,
Healthcare Payer and Pharma,
Xerox Corporation


Finding fraud, waste and abuse in health insurance claims can be like finding needles in a haystack, but they’re needles worth looking for. Financial losses due to healthcare fraud are estimated to be in the tens of billions of dollars each year. This translates into higher premiums and out-of-pocket expenses for individuals and businesses, as well as reduced benefits for consumers.

Fraud, waste and abuse are already hard to detect, and you can expect more challenges with the new patients, data and requirements that healthcare reform brings. The good news: Advanced algorithms and data analytics can root out these unnecessary expenses. The logic behind this capability is simple: When payers know the misbehavior that’s taking place, they can create appropriate deterrents.

As a primer, I offer the most common types of fraud, waste, and abuse:
  1. Upcoding: When a provider bills for a service that is more expensive than what was actually performed in order to receive a larger reimbursement. For example, submitting a claim that contains a code for applying a cast on a broken leg when the patient used only crutches. 
  2. Unnecessary Procedures: When a physician performs a procedure above what is required because it costs more money. This could be as serious as ordering an invasive procedure, such as surgery for a dislocated knee cap that could have been stabilized with a cast.
  3. Drug Abuse: Includes writing unnecessary prescriptions; recommending brand name drugs over generic; pushing prescriptions to one particular pharmacy, and more.
  4. Identity Theft: Ranges from a neighbor or friend who borrows an insurance card to receive treatment, to a medical services provider who uses one insurance card to bill multiple insurance companies. 
  5. Overpayment: This can appear in the form of duplicate payments, or allowing a provider to submit a claim more than once. It can also be as simple as an untapped credit balance due to overpayment.
These problems require advanced analytics and predictive modeling that looks at outlier data as well as relevant data, an improvement over the commonly-used rules-based systems. The results can help payers uncover emerging patterns and anomalies, and respond quickly.

Are you a payer struggling with FWA? What are you doing to combat this threat?

Predictions: Ten Ways the Driverless Car Will Change Everyday Life

Doug Collins 

Innovation Architect
Spigit Inc.

When Henry Ford made the car a mass-market success, people applied their immediate point of reference to its name, calling it the horseless carriage. Their point of reference was out back, eating oats and whinnying.

We come full circle. People look to experience the driverless car. Their point of reference is in the garage, complete with steering wheel and gas pedal.

Some brand manager, somewhere in the world, will make their professional career by giving this new means of conveyance its permanent name. For now, however, we make do with the driverless car.

The driverless car revolutionizes passenger travel in a way we have not seen since the birth of the commercial airline. It’s hard not to anticipate how its presence upends our practices, behaviors, beliefs, organizations, and industries.

In this spirit, I share with you—in no particular order—predictions gleaned from my wool gathering on how the driverless car transforms our world.

One. The concept of being “stuck in traffic” becomes as quaint as the thought of breaking a wagon wheel on a Conestoga Wagon trundling toward California in the 1860s. The optimization of traffic flow reduces the number of jams. Further, we no longer pay close attention to our speed or our progress, as we do today, with our eyes constantly on the road. Nine times out of 10, we find ourselves mildly surprised at how quickly we arrive at our destination, as we find ourselves lost in thought or otherwise preoccupied in our driverless car.

Two. The percentage of elderly people who, by their wishes, “age in place” in their homes increases. To be home-bound no longer means being unable to secure the basic necessities of life: groceries, prescriptions, the laundry, etc. People send their vehicles on errands for them. Or, conversely, providers of daily necessities such as groceries find they can affordably provide home delivery to their repeat customers.

Three. People who choose to drive a car are viewed as reckless, similar to how people who drive motorcycles without a helmet are viewed today. A vibrant hobbyist community of drivers remains, however. Members of auto clubs keep their driving skills sharp on the weekends at private tracks and, in some cases, back roads in the country. They favor leather jackets. The steering wheel stands as a powerful symbol of individualism and self-empowerment.

Four. The demand for vacation rentals in attractive places increases. The family leaves their home Friday, after work. They set their driverless car to their destination—perhaps a lake house. They sleep most of the way there, arriving refreshed Saturday morning. The tax in personal energy to get away for a long weekend approaches zero. Innovation around the time share—helping people connect to novel, leisure experiences—increases.

Five. The demand for professional interior design increases. People spend their time in their driverless car looking at its interior as opposed to the road. They aspire to make the experience as aesthetically appealing to them as possible. A vibrant aftermarket of designers grows to meet this need. The dull, utilitarian shell that characterizes the driverless car belies its posh interior.

Six. The expectation of quiet and of a smooth ride increases. People are no longer distracted by having to drive their cars. As a result, they more acutely experience every bump, every rev, and every shift in gears. The electric car is viewed as the preferred mode of propulsion in large part because it is quieter than the gas-powered alternative. A quixotic striving for the acoustically perfect driverless car begins.

Seven. The appearance of homelessness, if not the underlying causes, disappears. The more innovative social service agencies come to find that, while sleeping in one’s car is viewed as undesirable on many counts, staying overnight in a driverless car as it circulates through town offers a number of advantages. The shelter on wheels shepherds clients to agencies that provide sustenance.

Eight. Road and outdoor signage, which seemed a permanent fixture to the previous generation of drivers, disappears in remarkably short order. The in-vehicle navigation systems in the driverless cars prove to be a superior means of getting people from point A to B. Pedestrians, forgetting their smartphones as they leave the house, lose their way with alarming frequency. Navigating by compass through the neighborhood becomes a retro hobby for school-age children.

Nine. Fleet economy for passenger vehicles improves by 30%. People are surprised by the remarkable inefficiency that drivers had suffered from their constantly starting and stopping in city and suburban traffic. The West breaks from the petro kleptocracies, causing them to collapse.

Ten. The companies that offer auto insurance find their business decimated, as rates fall to a tenth their levels before the advent of driverless cars. The net economic surplus to consumers proves to be enormous, redirecting billions in spending on risk mediation to more productive uses. The companies that remain in the business of underwriting automotive transportation form an oligarchy to regain pricing power. They focus their energies on insuring against the catastrophic failures of the road networks, which happen rarely.

There you have it. My 10 reveal my native, perhaps naïve, optimism.

What are your 10?

About the Author:

Doug Collins serves as an innovation architect. He helps organizations big and small navigate the fuzzy front end of innovation by developing approaches, creating forums, and structuring engagements, whereby people can convene to explore the critical questions facing the enterprise. He helps people assign economic value to the process and ideas that result.

As an author, Doug explores ways in which people can apply the practice of collaborative innovation in his series Innovation Architecture: A New Blueprint for Engaging People through Collaborative Innovation. His bi-weekly column appears in the publication Innovation Management. Doug serves on the board of advisors for Frost & Sullivan’s global community of Growth, Innovation and Leadership (GIL).

Today, Doug works at social innovation leader Spigit, where he consults with clients such as BECU, Estee Lauder Companies, Johnson & Johnson, Ryder System and the U.S. Postal Service. Doug helps them to realize their potential for leadership by applying the practice of collaborative innovation.

© Doug Collins 2014
Innovation Architecture® is a registered trademark.

Three Ways to Innovate With Startups

  By Ricardo dos Santos
  San Diego State University

Corporations have begun to adopt innovation methods and principles they observe in startups (having long forgotten their own entrepreneurial roots). For example, GE’s FastWorks program is modeled upon Eric Ries’s Lean Startup philosophy, aiming to radically transform the way the 122+ year old company introduces new products and services to the marketplace. GE deserves credit for its widespread approach to encouraging experimentation to deal with business uncertainty. Most other corporations that have entertained startup-like approaches to new business development have done so within isolated corporate incubators (and/or corporate accelerators, which are essentially the same as a corporate incubator except supporting project teams in ‘batch’ vs. ‘continuous’ mode).

Innovating ‘like startups’ certainly fills a need in the corporate innovation agenda, but it is insufficient to avoid obsolescence from the role models themselves – the droves of startups looking to eat the larger corporation’s lunch. Simply innovating ‘like startups’ misses the larger opportunity for open innovation, the biggest single lesson learned over the past couple of decades of what maximizes return on innovation activities – it’s not the strongest that survive, it’s the most connected.

Open Innovation has best been implemented and fittingly popularized by P&G’s famed “Connect & Develop” program. By connecting with external entities to create new products, P&G greatly maximized its internal R&D and manufacturing investments. Most of the Connect & Develop efforts have been ‘upstream’ in nature, i.e., external substitutions for in-house inventions and intellectual property boosted by P&G’s downstream branding, marketing and distribution machines. P&G uses the world as its lab to solve technical challenges better, faster and cheaper for product categories it already understands and has determined as strategic priorities.

But Open Innovation has yet to be widely used to solve ‘downstream’ problems, i.e. help reduce market uncertainty for risky initiatives trying to create a new consumption paradigm or new product category. In this new day and age of hyper competition and uncertainty, modern corporations need Develop & Connect as much as they need Connect & Develop. And no better vehicle for scouting the market unknown than startups – If only corporations could innovate ‘with’ them!

Here are three ways: 

1. Set up a ‘non-strategic’ Corporate Venture Capital fund
Startups primarily need three things: (1) Guidance (2) Connections & (3) Survival Capital – but nothing attracts them like Survival Capital! Enter the resurgence of Corporate Venture Capital (CVC), noticing gaps in Crowd/Angel/ & VC investments. Corporations have long experimented with corporate venture capital. Sadly, few have managed to produce any real value (for the corporation or the startups). The CVC tool ‘should’ be a key addition to a corporation's innovation shed, but not if it’s to be grossly misused. Most CVC funds have faltered for two reasons: They’ve either been trying to emulate the financial focus and performance of traditional VC’s (to the chagrin of the corporate treasury function that somehow turns a blind-eye), or worst yet, they’ve been trying to make ‘strategic’ investments, artificially creating customers, channels or partners for new, internal venture initiatives in need of a ‘jump start’ (What ever happened to surviving on deserved merits? …or for peace sake’s, pointing someone to a plethora of third-party funding sources including loans!).

Corporate Venture Capital funds should be ‘non-strategic’! CVC should be trying to create ‘new growth choices’ for the parent company, not boosting existing, strategic choices and endeavors. They should be operating in the realm of uncertainty, not certainty. This includes investments in startups that may actually be threatening or competitive to the parent company. Nothing like speeding up your own possible disruption or obsolescence, instead of ‘rent seeking’ your way to a prolonged, but inevitable, slow death. Google seems to be the poster child for this CVC paradigm – Google Ventures also notes that startups need more than just survival capital, thus provides them with connections, mentoring and resources to succeed, independent of Google’s short-term P&L agenda. 

2. Tell your corporate incubator teams to ‘Go to Market’ with Startups 
As stated above, corporations have learned to adopt Open Innovation mainly as an efficient way to solve technical challenges, to shop for missing pieces of an envisioned product, if you will. But the missing pieces of a product’s ultimate success may be beyond technical components. Especially when dealing with ‘new markets’, the missing pieces are the more common, strategic failure points such as product/market fit and the profitable scalability of the business model.

If they are doing their job right, Corporate Incubator teams often face highly uncertain market conditions (where the host corporation’s assets and experience may not be that helpful, and actually, detrimental). Building MVP’s and pivoting quickly may not be enough to ultimately win in a turbulent new market opportunity (speed and agility won’t win if its being done within a local vs. a global maximum).

Corporations should certainly want to propose their own visions to market needs, but don’t necessarily need to follow a linear product development process to get there – they have the time and resources to innovate differently, specifically by hedging bets on the specific ‘how’s’ of product/market fit and scalable business model – After defining a certain ‘innovation thesis’, which may include an underlying ‘platform’ offering to a burgeoning new market arena, they can skip the traditional build or buy approach and instead partner with startups to pursue multiple go-to-market paths of success. Some division of labor will be natural – startups can pursue different target customer segments, IP differentiation or even different channel strategies. Startups can be supported through capital or other corporate resources – with no strings attached!

The corporation is by default buying ‘prime seating’ at the table of innovation and will be in a privileged position to make well-informed, bigger bets down the road (if any are indeed merited in the specific arena). MAS Holdings follows this paradigm in its innovation efforts and its quickly becoming a ‘must partner’ for startups in the wearable garments and smart fabrics space. 

3. Set up a physical ‘Colab’ Center 
The world of innovation isn’t (yet) completely flat. There are advantaged, regional pockets of innovation and innovators (worldwide). Startups thrive on a good working environment and ease of connections – and they can’t get enough! Corporations can directly or indirectly get involved with setting up innovation spaces where startups can work more effectively and efficiently as well as provide special services to perform technical and in-market experiments. At a colab space, corporate emissaries can understand startup needs first hand and work to provide value through connections, mentoring and resources (If one cannot support or set-up a new colab space, one can at least provide ‘office hours’ to startups – such as Janssen (J&J) is doing through its regional innovation centers).

Colab spaces can be inside the actual corporation itself, through special ‘Entrepreneur in Residence’ programs, such as CISCO’s EIR program. Cisco truly provides an open invitation to co-innovate.

Finally, colab spaces can be multiplexed or shared: Either owned and operated by multiple (usually non-competing) corporations or shared between startups and internal innovation teams of the same company – best to learn to innovate like startups by innovating with (or at least alongside) startups.

  • Corporate innovation isn’t really innovative if it doesn’t pursue ‘new growth’
  • Corporations are advised to innovate ‘like’ and ‘with’ startups
  • The Open Innovation spectrum should expand to include ‘downstream hedging’, go-to-market activities, not simply spin-in of new technologies (outsourced R&D) or spin-off of failed projects (outlicensing)
Three complementary ways to innovate with startups include:
  • Start a ‘non-strategic’ corporate venture capital fund
  • Define an innovation focus, then pursue through startup partnerships
    Open or join a corporate/startup colab space

Spok Shows How Marketing and Innovation Can Work Together to Produce Results

By Pam Didner
Marketing Strategist, Speaker and Author
Global Content Marketing 

“A business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Peter Drucker never explained how marketing and innovation could work together to produce financial results. David Meyer, Spok’s Director of Product Development, and Jay Miller, Creative Director of Mentormate, shared a great case study on how marketing and innovation work together at MobCon.
Yes, it was all about that pager
Spok (pronounced as Spoke), formerly known as Amcom Software, is a leading pager services provider. Pagers?! Who is using a pager in 2014? According to Meyer, police officers, doctors, nurses and select industries still use pagers, because it’s cheap, fast and reliable. A pager is small enough that it can be clipped on your belt or tossed into your purse. In addition, the signals to a pager can penetrate the thick concrete walls of an operating room or the far-end corners of a deep basement. In life-saving and urgent situations, you need a device that is reliable to reach the right people, no matter where they are. Even though it sounds so last-century, the pager is still an ideal and viable option.
Here is the reality
Yet, with the decline of pager sales in the US, from 60M units in the 90’s to less than 6M units in 2013, Spok recognized it had to CHANGE. The product development team needed to “re-imagine” pagers. They brought Meyer in and started a small product development team to design an updated version of the pager.
Re-imagining pagers: Oh, there is an app for that
Since ‘almost’ everyone has a smartphone, what about re-inventing pagers completely and making smartphones into virtual pagers? This eliminates the need for additional, single-purpose hardware and offers much greater convenience to their customers. The product team envisioned an app that acts as a virtual pager. App development is all about user interface design and software programming, which had not been an area of focus for the development team in the past. They needed not only to think differently, but also to completely modify their product design process.
Spok started to design a communications app for a team of doctors, nurses and call-centers to care for patients from check-in through check-out. It’s not an app to just send a one-way emergency beep from the call center to a doctor or a nurse. The design team envisioned this app empowering two-way collaboration within a team of medical professionals so that they can provide higher-quality care for their patients. The app would integrate the hospital’s contact list, doctor’s current locations, patient information and more. The app would notify a team of relevant players about their patients, when emergency arises. It also allows them to talk to each other about patient status in an encrypted environment that complies with the need for privacy. No longer just a virtual pager, the app is a collaboration and communications tool for doctors, nurses, call centers and relevant team members.

Don’t jolt your sales and marketing teams at the last minute
Consider this: a company had been selling ‘pagers’ for over thirty years, then the sales and marketing teams are asked to sell and market an app on a phone. The sales and marketing team needs to be re-trained and re-educated on the new product and its features. They need time to learn, adapt and energize. If Meyer waited until the product is coded to educate the sales and marketing team, it wouldn’t give the team enough time to internalize and provide feedback about the product. To avoid any surprises and accelerate time-to-market, the sales and marketing team needed to become an essential part of the product development process from the inception. Tweet It!
A deliberate process to engage the marketing team
Spok aimed to launch the app at their annual customer conference. The team, then, worked backward to create a timeline for the app development. Since the new product looked vastly different than their current product, the team created a process to update and engage relevant stakeholders at each stage of product development.
Spok got the marketing team involved in end-user research at the ‘discovery’ stage, in product feature discussions at the ‘definition’ stage and developed the messaging and content at the ‘design and develop’ stages. Marketing was no longer the last link in the long chain; it worked as an integral part of product development.
Here is a nice visual of key marketing deliverables at different product development stages:

Since this was a brand new product, it was important to get executive approval at the initial discovery stage to receive proper funding and resources. After the features were tentatively defined, the product team shared a demo with management. The marketing team’s active engagement allowed Spok to develop messaging and story framework early. Tweet It! They even had time to create a teaser campaign to communicate with their customers. Prior to the launch, marketing related content was created for on-line and off-line communications.

The company also recognized that they were transitioning from a pager company to become a software company. The marketing team worked with executives to devise new branding and rename the company. That strategic decision signaled their customers that the company was making a bold move and aimed to provide cutting-edge products and services to their customers. A new name, a new logo, a new direction and a new company!

Meyer’s key lessons:

  • Innovation and marketing must work together to produce results. Tweet It!
  • Educate key stakeholders during the product development stage and seek their input. Tweet It!
  • Proactively engage marketing to create story and content. Tweet It!
  • After the successful launch, the product team continues to tweak the app with new features suggested by end-users and other stakeholders. Pagers will continue to exist, but the company now sees an opportunity to grow too.

Relevant articles on marketing and innovation from Pam:

Marketing is Innovation’s BFF on AdAge
(the BtoB section)
New is Old: What does it mean to be original?