United States health care may need reverse innovation

The realization that the American health care system must simultaneously decrease per-capita cost and increase quality has created the opportunity for the United States to learn from low and middle-income countries. “Reverse innovation” describes the process whereby an inexpensive innovation is used first in countries with limited infrastructure and resources and then spreads to industrialized nations like the United States.

The traditional model of innovation has involved the creation of high end products by companies in industrialized nations and the spread of these products to the developing world by adapting them to function in low and middle-income countries. Reverse innovation reverses the direction of spread with the United States borrowing new ideas and products designed for less wealthy countries in order to deliver health care more efficiently.

Resource challenged low and middle-income countries are different from the United States in at least six ways that can serve as catalysts for such reverse innovation: 1) affordability, 2) leapfrog technologies, 3) service ecosystems, 4) robust systems, 5) new applications, and 6) the absence of intermediaries.

These nations can’t afford expensive goods so they have to find inexpensive materials or manufacturing options. They also lack 20th century infrastructure and so they have leapfrogged to newer technologies such as mobile phones or solar energy instead of landlines and petroleum based energy sources. Service ecosystems develop in developing countries because entrepreneurs have to rely on others for help by creating new partnerships like video-game cafés where gamers test new products. Emerging markets require products that work in rugged conditions, and 
customers in poor countries have few product choices, providing market openings for add-ons that update and extend the lives of existing merchandise. Intermediaries such as venture capitalists, universities, and regulators are also often underdeveloped in poorer countries.

An example of how an absence of intermediaries can spur innovation is the Medtronic approach to chronic disease management in nations without adequate medical school capacity to train specialists in heart disease. Sixty nine percent of deaths in such nations are due to chronic disease, but the building of medical training programs takes decades. Medtronic designed a low-cost, pill-sized pacemaker inside a stent that can be put into the heart instead of the invasive intercardiac leads used in the US to electrically synchronize the heart. Remote sensors in the pill-sized pacemaker transmit signals via any smartphone to a cloud-computing infrastructure. Although this new technology was developed for India that has one billion citizens but only 100 electrophysiologists, Medtronic intends to market this low-cost pacemaker in the United States and Europe.

General Electric has embraced reverse technology as a way to survive in an era where economic growth is slowed in the United States and Europe, but growing rapidly in India and China. GE developed a $1,000 handheld electrocardiogram device for rural India and a $15,000 PC-based portable ultrasound machine for rural China. These devices are much more affordable and rugged than their American counterparts, and they are now being sold in the United States.

General Electric has also partnered with Embrace to distribute a low-tech infant warming device that consists of a sleeping bag, a sealed pouch of wax, and a heater. In contrast to traditional incubators that cost $20,000, this new device costs $200 and will help warm the 20 million low birth weight and premature babies born around the world.

OneBreath is a rugged, low-cost ventilator that was designed for use in developing countries that experience large influenza pandemics. By measuring and controlling airflow with software rather than hardware, OneBreath was able to reduce the cost of ventilators from $40,000 (with $180 replacement tubes) to $800 (with 50 cent replacement tubes).

Procter & Gamble is now marketing a honey-based cold remedy created for Mexico in the United States and Europe, and the Center for International Rehabilitation has developed low cost prosthetic and orthotic devices that can be used in rural areas where highly-trained specialists are not available. JaipurKnee has developed a $20 high performance prosthetic knee joint for amputees in India who cannot afford the $100,000 titanium knee joints routinely used in the United States.

The Stanford University BioDesign Program has developed a $20 device for delivering fluids or intravenous drugs into the bone marrow when vascular access is unavailable. The device was invented in India, but it could be used in rural America as well.

The United States is now faced with the challenge of decreasing per-capita cost and increasing quality. Many believe that the high cost of American health care is the major reason that the United States is facing a large federal deficit problem that is hampering the ability of American companies to compete in a global economy. Some believe that the high cost of American medicine also is a major factor in causing and prolonging the current recession. The high cost of health insurance is a problem for employers who then do not give salary increases to their employees. The employees borrow money in order to continue to support their lifestyle. Stagnant employee wages have been cited as a reason for Americans defaulting on their mortgages and car payments, which resulted in the current recession that started in 2008.

American health care organizations are facing decreased revenues due to decreased volume of hospitalizations and office visits by unemployed workers, Medicare cuts contained in the Affordable Care Act, and cuts resulting from the budget deficit ceiling compromise passed by Congress that will result in January 2012 with either a $1.5 trillion or a $1.2 trillion decrease in federal spending. At a time when it clear that health care providers will be receiving less revenue, it would be wise to adopt inexpensive innovations that have been created for less developed countries. Reverse innovation may be one way that American medicine can decrease per-capita costs and increase quality at the same time.

Kent Bottles provides health care leadership consulting and blogs at Kent Bottles Private Views.

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  • http://twitter.com/Mtl4u2 Les Zouazo

    Anything that is touted as “economical” in health care is viewed with enormous suspicion by the American public.

    Consider this:
    http://healthcareorganizationalethics.blogspot.com/2010/06/consumers-dont-believe-in-evidence.html
    http://content.healthaffairs.org/content/early/2010/06/03/hlthaff.2009.0296.full.pdf+html

    The majority of consumers believe that all care meets minimal quality
    standards, that more care means higher quality care, that newer care is
    better care, that treatments costing less are inferior, and that medical
    guidelines “represent an inflexible, bargain-basement approach to
    treating unique individuals.”

    Such beliefs are what’s in great part, hampers smart reform of the US health care system. And let’s not start on the profound deficiencies or our political system when comes the time to properly regulate health care.

  • http://www.facebook.com/rfdbbb Robert Bowman

    Family practice is an example of a reverse innovation. Broadest generalist scope practice worked 100 years ago and still works today. Three new innovative workforce types (NP, PA, MPD) have become 55 – 65% non-primary care sources with fewer graduates remaining in primary care and broadest generalist direct care with each year after graduation. Family practice MD, DO, NP, and PA has a consistent 50% distribution to 30,000 zip codes with 65% of the nation – something that IM or PD or other workforce reaches with half the distribution. Any replication of reverse innovation for 30 years, even 1% annual growth, would have helped the elderly, poor, near poor, rural, CHC, and other populations left behind that are all more likely to be served by family practice employed workforce. The trick is staying in family practice – which 95% of MD and DO accomplish as family physicians and less than 25% of total NP or PA graduates accomplish.

    Spending patterns more specific to primary care with less for non-primary care, training specific to primary care and family practice, and programs specific to health access characterized the only doubling of primary care workforce from 1965 to 1980. These were not innovations. They representated reverse innovations. Specific health access spending and specific health access workforce work. Innovations can work too, as long as they result in more health access spending and more retained longer in health access for more and better workforce. This is not about innovative design however – it is about the basics that work now, that worked in the past, and that will work in the future – if we move beyond innovation focus to what works – by design.

  • Anonymous

    Dr. Bottles: Thank you so much for your brilliant article on reverse innovation.   I was not familiar with the concept.  Do G.E., Medtronics and Proctor & Gamble, among others, sell these products in the U.S.?   If they are not sold in the U.S. as alternatives to much more expensive products, why not?  I guess it is all about the bottom line?  

  • Anonymous

    I also was not at all versed in what “reverse innovation” was, so Thank You for providing this article.  What made it especially interesting, and poignant, was the multitude of examples that you offered – very telling of just a few of the moderate tech / high-touch / low cost alternatives that could help drive US Healthcare costs down.  Can you offer any insight as to what role the FDA plays in “reverse innovation” and an opinion re: whether the FDA is more supportive or inhibitive in moving such innovations forward?  

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