Skip to Content

Is Health Care Innovation Good Business?

“Innovation in healthcare is taking many forms, from meshing big data and design thinking to reduce hospital infections to personalized medicine based on a patient’s genomic profile,” according to Yale Insights. But with all of the opportunity, how does health care innovation fare as a business investment?

The first challenge to a financial ROI is that — to all of our benefit — health care innovation must necessarily focus primarily on patient outcomes. One example is the business of digitizing medical information.

“The process of digitizing medical information provides insights into both the promise and the challenges in making systemic improvements. Electronic medical records offer a cornucopia of theoretical benefits: Completeness and portability that would let teams of doctors coordinate immediate care while keeping a view of the patient’s long-term health. Ease of seeking a second opinion or changing providers. An incomparable source of public health data that researchers, providers, insurers, and policy wonks could use to drive toward more effective treatments—both in cost and health outcomes. But this promise has been just over the horizon for decades.”

One idea for financial return: FDA swaps and annuities. Tomas Philipson, a University of Chicago economist, writes in Forbes: “The cost of capital to conduct medical R&D is high because investors must be compensated with high returns to offset the risky and long drug development process. This cost of capital could be reduced, and thus medical innovation spurred, by better financial mechanisms for sharing risks between medical R&D investors and outside capital markets. FDA Swaps and Annuities is a step in the right direction.”

The potential of electronic medical records was one of the innovations discussed in a recent Yale SOM webinar:

Meanwhile, the Brookings Institution notes that mobile technology is upending how healthcare is delivered in Africa.

“Mobile devices and mobile health (mHealth) services have, for example, revolutionized maternal care, chronic disease prevention, and the management of Ebola and malaria epidemics. Innovations in mHealth have shown to improve the efficiency and effectiveness of African medical systems through patient tracking and reporting, as well as extend critically needed health services to underserved areas, found both in rural and urban African communities.”