Healthcare Systems & Services

The next wave of healthcare

innovation: The evolution of
ecosystems
How healthcare stakeholders can win within evolving healthcare ecosystems.

by Shubham Singhal, Basel Kayyali, Rob Levin, and Zachary Greenberg

© Getty Images

June 2020
 Author’s Note: This paper was originally 2. High rates of healthcare technology investment
completed for publishing in early 2020 prior to are being realized. From 2014 to 2018,
the major outbreak of the COVID-19 pandemic there have been more than 580 healthcare
in the United States. We believe that the COVID- technology deals in the United States, each
19 pandemic, and economic downturn, has more than $10 million, for a total of more
only accelerated the evolution of healthcare than $83 billion in value. They have been
ecosystems. As we move forward, organizations disproportionately focused on three main
can consider ways to use healthcare ecosystems categories: patient engagement, data and
to improve patient experience and health, while analytics, and new care models.⁵
reducing total costs.
3. Technology giants are locked in a trillion-
Ecosystems create powerful forces that can dollar battle to win share in the public cloud
reshape and disrupt industries.¹ In healthcare, and to retain consumer “mindshare” and
they have the potential to deliver a personalized engagement. As a result, they are investing
and integrated experience to consumers, billions of R&D dollars into their platforms to
enhance provider productivity, engage formal and create services easily usable by a range of
informal caregivers, and improve outcomes and customers and for a range of applications (for
affordability.² We define an ecosystem as a set example, predictive analytics) that accelerate
of capabilities and services that integrate value innovation. Additionally, certain partnerships
chain participants (customers, suppliers, and or acquisitions, whether between pharmacy
platform and service providers) through a common providers or health systems and technology
commercial model and virtual data backbone companies, reflect increased integration, as
(enabled by seamless data capture, management, well as rising concerns around patient privacy.
and exchange) to create improved and efficient Healthcare incumbents and new entrants have
consumer and stakeholder experiences, and to a huge opportunity to tap into this innovation to
solve significant pain points or inefficiencies. gain market share while improving the cost and
quality of healthcare.
Healthcare has shifted away from its post-
World War II focus on contagious disease and 4. Proposed regulatory changes offer the
workplace accidents, which necessitated potential for more integrated data sharing,
episodic interventions.³ Today, the primary and greater transparency for consumers.
goal is preventing and effectively managing The Centers for Medicare & Medicaid
chronic conditions. However, as we have shown, Services (CMS) and the Office of the National
productivity in healthcare is lagging other services Coordinator for Health Information Technology
industries as these goals shift.⁴ New technologies (ONC) are making changes to promote data
promise care that is available nearby or at home, sharing between healthcare organizations.
supports continuous self and autonomous care, These regulatory changes include
and reduces friction costs between supporting interoperability of electronic health record
stakeholders. These shifts create an imperative for (EHR) data and increased rate transparency
stakeholders to move toward an ecosystem-based for consumers and may help eliminate the data
model of care enabled by five key industry forces silos that have historically prevented end-to-
driving technological innovation: end care analytics.

1. Longstanding industry inefficiencies are 5. Healthcare industry incumbents increasingly

leading to affordability, outcome, and quality are making large bets in acquiring capabilities
challenges, and poor consumer experience. that could advance their ecosystems. Payers,
These inefficiencies are not new and provide providers, healthcare services, and technology
the fertile ground for innovation to deliver high firms are acquiring assets to extend their data
returns. and analytics capabilities and engage with

2 The next wave of healthcare innovation: The evolution of ecosystems

 patients longitudinally, driving almost $40 first television series in 1954, and, by 2019, the
billion in healthcare technology deals from 2014 streaming service Disney+. Its theme parks,
to 2018.⁶ such as Disney World, reinforce the brands of
characters, allowing children and families to
This white paper explores three main questions in have engaging in-person experiences. Those
further detail. children also ask for Disney toys, Disney apparel,
and Disney games, creating a self-reinforcing
— What could the healthcare ecosystems of the experience within the ecosystem enabled by the
future look like? control of a scarce resource—content—and the
underlying data and analytics to best deliver it.⁷
— What are the component layers that will form
future healthcare ecosystems? The healthcare ecosystems of the future, like
other ecosystems, will be centered on the
— How can healthcare stakeholders prepare for consumer, in this case the patient. The capabilities
and act within healthcare ecosystems? and services that form the healthcare ecosystems
of the future (illustrated in Exhibit 1) will include,
but are not limited to:
What could the healthcare ecosystems
of the future look like? — modalities of traditional care: direct care and
Ecosystems have emerged across industries pharmaceuticals administered by providers,
because they do the following: across traditional sites of care

— address industry inefficiencies, often by — home and self-care: patient engagement,

optimizing underutilized assets/resources or self- and virtual care, remote monitoring,
eliminating friction in consumer experience and traditional care that can increasingly be
delivered near or in the home
— benefit from network effects, because as they
grow, they create more value for suppliers (for — social care: social and community networks
example, gig drivers or app developers) and related to a patient’s holistic health focused on
consumers alike community elements of unmet social needs

— own something in scarce supply that provides — daily life activities: patient actions and habits
strategic leverage to the ecosystem operator enabling wellness and health, including fitness
and nutrition
— use the data generated in the ecosystem
(for example, purchase patterns or viewing — financing support: operations and financial
behaviors) to tailor solutions for suppliers and infrastructure supporting industry care events,
consumers including payment and financing solutions

— reduce likelihood to switching due to ease Each of these capabilities and services contribute
of use or structural advantages gained or to the underlying data backbone and advanced
generated in the ecosystem analytics technologies. These capabilities
maintain data integrity and enable insights from
Mature ecosystems exist across industries, with the ecosystem. These layers are further outlined
both technological disruptors and incumbents in section 2.
deriving value from these ecosystems. One
example is Disney. Its robust ecosystem allows The healthcare ecosystems of the future will
each component to positively reinforce the likely be defined by the needs of different patient
other. Disney launched its first movie in 1937, its populations and their associated effective

The next wave of healthcare innovation: The evolution of ecosystems 3

 Exhibit 1
Healthcare
Healthcare ecosystems of theof
ecosystems future will be will
the future centered on the patient.
be centered on the patient.

Leverages support
Supports payment
services
and financing
● Transportation service
● Payment structuring ● Faithinstitutions
and financing ● Community
● Digital and automatic
● Family
payments Financial data Social structure data ● State assistance
● Savings accounts
● Benefits/insurance
coverage
Advanced analytics health plan platform

Provider-generated Patient-generated
data clinical data

Health and wellness

Connects consumers with data Integrates home, near-home,
traditional modalities of care and virtual care services
● Pharmacy ● Diagnostic tools ● Self-service solutions
● Hospital and support Tracks daily ● Monitoring tools
● Ambulatory clinic ● Scheduling life activities ● Compliance and
● PCP/specialist ● Quality adherence tools
● Nutrition
● Care team ● Home health
● Fitness
coordination ● PT and rehab
● Virtual care
● Retail clinics

care journeys (including beyond care itself). The of patients who have multiple complex chronic
consumer-oriented nature of these ecosystems also conditions. For these patients, especially the
will increase the number of healthcare touchpoints, Medicare and Medicaid dually eligible population,
with the goal of modifying patient behavior and coordination between providers and services
improving outcomes. delivered virtually and in-person at or near the home
becomes critical to the end-to-end experience.
On one end of the spectrum, healthcare ecosystems Technology components of these ecosystems
will emerge to address the needs of healthy patients, will often be leveraged to enhance the in-person
who have less consistent medical challenges, but experience and support the care team. This
often set personal wellness goals. These patients team includes informal caregivers, such as the
will likely experience a more digital ecosystem, adult children of elderly patients who may play an
where patient data and insights are consumed in increasingly important (and technology-enabled)
a highly personalized and meaningful way, such as role. Healthcare startups are already experimenting
with wearable devices. Only a small percentage of with this model in a targeted way.⁸
the touchpoints would be in modalities of traditional
care. Although patient segments help organize how we
think about care journeys and the ecosystems
At the other end of the spectrum, healthcare required to support them, the services provided
ecosystems will emerge to address the needs along these journeys will be tailored to the specific

4 The next wave of healthcare innovation: The evolution of ecosystems

 Exhibit 2
Meet John.
Meet John.
In a patient-centric ecosystem orchestrated by an incumbent payer, John—a financially constrained
patient with multiple chronic conditions—will have a personalized frictionless experience

Infrastructure

Common data backbone

John’s data—patient-generated, provider-generated, social, health and wellness, financial, etc.—is captured, curated,
managed, and shared across stakeholders as needed, for a complete view of his health.

Intelligence

Advanced analytics technology

John’s care is supported by advanced analytics services and artificial intelligence that convert John’s data
into actionable insights for John and his health network.

Engagement

Digital concierge Weekly meal delivery Community resource group

In the past, John was disengaged John’s specialist recommends that The digital therapeutic signs John
from his healthcare. Now, John’s John start following a special diet. up for a community resource group
digital concierge helps him stay Knowing that this will be difficult for that he can interact with through
healthy; educate him, his caregiver, him, the digital concierge enrolls the platform.
and his family on his condition; John in a weekly meal delivery
check in to see how he is feeling; service and also alerts John’s
recommend behavior changes; and designated support network, like
even receive care. his caregiver and family.

Automatic prior-authorizations and prescription delivery Proactive phone call

When John needs a refill for his current prescriptions, Based on advanced analytics technology, an alert is sent
the prior authorization platform enables real-time approval. to a member of John’s care management team that his
The medication request is automatically sent to the symptoms are likely to worsen in the next couple of days.
pharmacy and scheduled for 3-hour delivery to John’s An advanced practice provider, who is skilled at
home. John’s doctor never has to submit a request for working with members who have chronic conditions, like
approval. Crohn’s, calls John to help him avoid an unnecessary
ER visit.

Digital check-in Transportation assistance

When John arrives at his visit, the administrator Based on John’s past behavior and personal info he
is expecting him and all he needs to do is a face has shared with the digital concierge, the tool
scan to verify his identity. He also interacts automatically schedules John a ride-share to bring
with a vital tracker to expedite the initial visit. him to his visit. John can even check into his
appointment in the car.

Seamless digital payment

The provider and payer automatically manage the
payment of the out-of-pocket amount based on Follow-up call and patient
John’s chosen payment plan. John receives a history AI platform
digital receipt. John receives a follow-up call from his advanced practice
provider. This follow-up call is powered by the patient-
history AI platform and allows the conversation to be
focused on potential issues specific to John.

The next wave of healthcare innovation: The evolution of ecosystems 5

 needs of each patient. Below we imagine a tailored data, and social data. As standards are established
patient journey for John, a financially constrained and cloud services continue to proliferate, this data
patient with multiple chronic conditions, and the will be easier to access, consume, and integrate.
healthcare ecosystem that supports him. Patients will still be owners of this data and will be
required to grant stakeholders permission. While
balancing privacy, stakeholders will have to ensure
What are the component layers that they are building in the appropriate safeguards
that will form future healthcare and that the ecosystem will provide clear value-
ecosystems? added benefits before patients are willing to make
Ecosystems are built on three layers: infrastructure, the trade-off.
intelligence, and engagement. The infrastructure
layer is foundational, composed of effective data In healthcare, data liquidity will likely enable more
capture, curation, management, storage, and coordinated care and accelerate innovation.
interoperability to create a common data set upon Open application programming interfaces (APIs)
which the ecosystem can operate. Built on top of built for liquid data can provide access to patient
the infrastructure layer is the intelligence layer, records, support electronic data exchange for
which converts data elements to consumable and care transitions, and enable the integration of
actionable insights. Finally, bringing an ecosystem new data sets, including and beyond claims,
to life also requires a robust engagement layer, clinical, pharmacy, financial, and social data. For
enabled by the infrastructure and intelligence layers, example, Medicare-participating hospitals could
to effectively curate an end-to-end experience for automatically send HIPAA-compliant electronic
suppliers who provide services and offerings to notifications to in-network post-acute care
patients. Components of these layers can be built, providers and other stakeholders when a patient’s
bought, partnered, or vended by ecosystem curators status is updated. As ecosystems evolve, tangible
and participants. concerns and risks about the manipulation and
ownership of patient, consumer, and provider data
The infrastructure layer requires data liquidity will arise for participants. Preserving individual
Data liquidity—the ability to access, ingest, and privacy and trust is critical to the functioning of
manipulate standardized data sets—is required for ecosystems. Reforms and regulations are beginning
the infrastructure layer to serve as the foundation to address this challenge, with likely more to come.
for all insights and decisions made in the ecosystem.
This data liquidity enables the ecosystem to create Although the Department of Health and
value and removes silos by allowing stakeholders Human Services appears to be advancing data
to operate off the same data sets with increased interoperability, evidenced by the CMS and ONC
coordination. proposed rules around data interoperability,
standard data formats, and APIs,10 the regulatory
Similar increases in data liquidity in other industries, framework and mechanism of implementation of
specifically consumer banking, have altered increased data liquidity will continue to evolve,
competitive landscapes. The Society for Worldwide because stakeholders, including patients, will
Interbank Financial Telecommunications (SWIFT) demand it.
messaging system, created in 1973 to transmit
financial data, was a game-changer in introducing The intelligence layer requires advanced
industry-wide standards.⁹ The result is an improved analytics
customer experience and added consumer choice. Successfully converting data from the infrastructure
layer into insights in the intelligence layer requires
Increased data liquidity enables stakeholders to advanced analytics. Advanced analytics—including
access a complete longitudinal patient record, machine learning, natural language processing,
consisting of patient-generated data, provider- artificial intelligence, and big data analytics—
generated data, health and wellness data, financial is critical to gain actionable insights to guide

6 The next wave of healthcare innovation: The evolution of ecosystems

stakeholders across ecosystems. Data liquidity will In this layer, data liquidity and infrastructure
enable advanced analytics in the intelligence layer will support advanced digital therapeutics
and lead to more robust patient risk identification, and coordinated care across traditional and
clinical pathway development, and personalized innovative care models that rely on up-to-date
and precision medicine. and comprehensive patient information.

In healthcare, advanced analytics allows To fully take advantage of this model in

stakeholders to use personalized and predictive healthcare, industry behaviors will need to
insights to more effectively manage population change. For example, provider practice changes
health. Our 2011 research identified a $300 include using the layer of intelligence to inform
billion opportunity from data and analytics in US care decisions, leveraging innovative care
healthcare, yet only 10 to 20 percent of that was delivery models and working across a care team
captured as of 2016.11 Despite this lag, advanced at distributed sites, and capturing data from all
analytics is being applied to healthcare problems relevant healthcare-related encounters. These
(for example, PathAI is leveraging machine learning changes will require payment model innovation
to improve cancer diagnoses, Babylon Health to align provider and healthcare stakeholder
is using AI to improve remote monitoring, and incentives to change provider, payer, and patient
various pharmaceutical companies are developing behaviors.
breakthrough therapies enabled by AI).
The role of technology giants across
Much of the innovation in this space could be healthcare ecosystems
driven by technology giants. Seventy percent Technology giants—and the billions of R&D
of AI experts in the United States work for dollars they are investing to create cross-
Google, Facebook, Microsoft, and Amazon,12 industry capabilities—will influence the evolution
with 30 percent of all US AI patents related to of the healthcare ecosystem. The only question
healthcare.13 Google, for example, is developing its that remains is in what role.
own AI/machine learning capabilities for disease
detection.14 These capabilities will help healthcare At a minimum, they will supply the underlying
incumbents and new entrants leverage robust capabilities across layers. In this world,
healthcare-specific services that can be built, healthcare incumbents would curate
partnered for, or acquired. ecosystems and build on top of the big
tech players’ capabilities through industry-
The engagement layer requires shared digital specific services augmenting their horizontal/
platforms, compelling consumer experiences, cross-industry infrastructure, intelligence,
and new payment models and engagement capabilities. For example,
The engagement layer of the ecosystem is technology giants are locked in a battle
where end users interact with services that are to win share in the public cloud, creating
in turn supported by underlying data sets from infrastructure that could give healthcare players
the infrastructure layer and insights from the massive computing power. Furthermore, as
intelligence layer. The engagement layer requires data becomes more liquid, these technology
a shared digital platform where end users can giants will be able to continue to scale this
access, through one principal channel, the infrastructure, supplying the foundation
curated set of services and offerings. Amazon healthcare stakeholders can build on to realize
is an example of a non-healthcare ecosystem value through healthcare ecosystems, and win
that has enabled consumers to leverage a single market share against traditional competitors.
digital platform for an entire spectrum of needs. At the same time, healthcare stakeholders who
In healthcare, these engagement offerings might partner with these technology giants will need
include appointment scheduling, transportation to address key risks associated with these
assistance, daily health monitoring, and financial arrangements, including those related to privacy,
assistance. security, and internet protocol (IP) management.

The next wave of healthcare innovation: The evolution of ecosystems 7

 The largest technology players might build and How can healthcare stakeholders
curate their own ecosystems. They could go to prepare for and act within healthcare
market either directly to consumers or through a ecosystems?
select set of industry-incumbent partnerships. Despite the movement from some of healthcare’s
In this world, healthcare profit pools would likely major players, many have not yet clearly articulated
be disrupted, as these large technology giants their ecosystem strategy. Nor are they set up with
disintermediate existing healthcare incumbents’ talent, operations, and technology that can fully
relationships with their patients or empower realize value from either curating or participating in
incumbents who are partnering with them to integrated, omni-site, patient-centered ecosystems.
gain share. For this scenario to emerge, the large
technology players would likely need a series of Strategically, stakeholders need to decide whether
regulatory changes (for example, increasing data they will act as curators or participants across the
interoperability) and be reasonably confident that ecosystems that they touch. Stakeholders who
the economics of disrupting the industry make wish to curate an ecosystem will need to ensure
more sense than enabling innovation within it, which meaningful improvement in outcomes for a specific
typically involves lower risk. set of patients. This approach will require being
clear on which industry-agnostic services they
Finally, although the battle for share between leverage and how they augment those services
technology giants in the infrastructure and with healthcare-specific capabilities to create
engagement layers is fairly mature, the intelligence a differentiated ecosystem. Other stakeholders
layer is much less developed, leading to heightened who want to provide point-solutions will need to
competition for talent and investment in these ensure their value proposition is both competitively
cross-industry oriented capabilities. An illustration distinctive and compatible with a variety of
of the competitive dynamics between technology ecosystems.
giants is provided in Exhibit 3.

Technology giants are investing in capabilities across the layers of

Exhibit 3
healthcare ecosystems.
Technology giants are investing in capabilities across the layers ofhealthcare ecosystems.

Layer of engagement
Systems of consumer and patient
engagement (e.g. search, wearables, Apple Microsoft Android Amazon
e-commerce, behavioral health aps, IoT)

Layer of intelligence
Systems to convert data elements into
insights and intelligence to inform or
drive actions

Layer of infrastructure
Microsoft Google AWS
Systems of data capture, curation Azure
management, and interoperability

8 The next wave of healthcare innovation: The evolution of ecosystems

In addition, most stakeholders will need to make stakeholders to realize value from ecosystems.
foundational upgrades across ecosystem layers, This shift requires curators and stakeholders to
including: ensure adoption of new technologies, services,
and capabilities in an already crowded space.
— Technology upgrades to leverage increasing Ecosystem curators and stakeholders offering
data liquidity. Stakeholders must ensure that all point solutions therefore need to consider not
created data is stored in a standard format and only which technology and services they will
easily accessible. For many organizations, this provide, but also how those capabilities will sit
upgrade will be accomplished by a transition to within workflows and journeys, build on existing
the cloud and the development and curation of behaviors, and are linked to incentives.
data lakes. This approach also will enable the
reconciliation of broader sets of data, including, Payers
for example, patient-generated and social/ Payers, who have access to members and claims
demographic data. data and a core competency in understanding,
adjusting to, and shaping regulation in a highly
— Operating model upgrades to drive insights regulated industry, are well-positioned to act
through data and analytics. By building and as curators of specific healthcare ecosystems.
integrating APIs and services that increase data That said, payers likely have to actively position
availability, stakeholders will enable advanced themselves for this role by curating an end-to-end
analytics and automation techniques, such experience for members and providers that can be
as predictive models and decision engines. improved upon over time, especially as the payer
Increasing the types and quantities of data that core value proposition begins to be “unbundled.”
can be used to drive decisions is critical for a This would include individual point solutions that
robust healthcare intelligence layer. begin displacing core payer functions. Some
payers are already integrating with pre- and post-
— Data-first talent model upgrades to capture acute care delivery systems and finding higher
value. To effectively capture the value from the returns.
improved infrastructure and intelligence layers,
organizations and participants can adopt new Curating an ecosystem requires a few steps:
technologies that generate insights and change
stakeholder behaviors based on these insights. — Determine which ecosystem or sub-
These talent upgrades include, for example, ecosystem to curate. Given the range of
teaching stakeholders how to use these member needs and the ways in which patients
insights to make decisions, and require change engage with healthcare stakeholders,
management and targeted re- or up-skilling. ecosystems must be customized to different
types of care needs and journeys (for example,
— External and partner services upgrades healthy individuals versus dual-eligible patients
to expand engagement. Enabling provider, with multiple chronic conditions). Payers should
patient, and other stakeholder engagement decide which ecosystems they want to curate
across the ecosystem will likely require rather than simply participate in.
an external-facing orientation focused
on collaborations and partnerships in line — Build partnerships that will allow stakeholders
with stakeholder needs, particularly in the to create a seamless experience for patients.
engagement layer, but also to optimize Effectively curating an ecosystem requires
infrastructure and intelligence. the ability to create a seamless experience
for patients. This requires an underlying
Additionally, healthcare stakeholders will need data infrastructure that follows patients
to shift behaviors of healthcare participants throughout their healthcare journey and
across patients, providers, and other healthcare enables interoperable transfer of data

The next wave of healthcare innovation: The evolution of ecosystems 9

 across healthcare stakeholders. It involves “unlock” for productivity. Additionally, the
intelligence that turns that data into insights, emergence of ecosystems may drive care delivery
and engagement capabilities that lead innovation as it enables providers to leverage
to stakeholder action. In many cases, the a broader array of services for patients beyond
underlying technology required for each layer of responding to acute needs.
future healthcare ecosystems already exists and
is relatively mature. Therefore, payers may be In an ecosystem-driven world, providers can either
able to curate ecosystems most efficiently if they participate in an ecosystem curated by another
partner with existing technology players and stakeholder, as a professionalized deliverer of
apply healthcare-specific talent and operating episodic or acute care, or they can curate a care-
models to orient that technology. In this context, oriented ecosystem for certain populations across
payers will need to effectively manage the risks the care continuum. Providers are most likely to act
of partnership, including security and privacy as ecosystem curators for subsets of the population
concerns. with intense, chronic needs; lower-need, healthier
populations have less interaction with providers and
— Integrate patient and provider services into are not likely to participate in an ecosystem curated
the ecosystem through contract, partnership, by a provider.
or acquisition on a use-case basis and with
incentives in mind. Curating a successful The goal for providers who choose to curate
ecosystem requires operating in an agile, ecosystems would be to deliver a fully integrated
patient-oriented way. Building the ecosystem experience, centered around the patient, and
on a use-case basis allows payers to gradually incorporating informal caregiver engagement.
transition to these new ways of operating, These care-oriented ecosystems will need to extend
while also ensuring a robust set of services that throughout the entire care continuum. Providers
focus on the patient/patient-profile selected. who wish to pursue this strategic path will need to do
For example, if a payer decides to focus on the following:
simple chronic patients, they may first decide to
integrate services that enable remote monitoring 1. Develop a strategy for bringing together care
for providers treating patients with diabetes. experiences across the entire continuum (that
Additionally, payers can weigh investing in the is, seamlessly linking pre-acute, acute, and
capabilities required to build new payment post-acute care). This kind of integrated network
models in order to best enable ecosystems. integrity likely requires deployment of a few
Given the increasing complexity of ecosystems critical enablers:
and the requirement for stakeholders to work
together to optimize the quality of care for • Mechanisms that make scheduling and
patients, payers are likely to focus on payment referrals processes more seamless and
models that effectively align incentives across proactive. These mechanisms could include
ecosystem stakeholders. open scheduling, centralized referral
recommendation tools, or care navigators
Providers who schedule follow-up appointments
While provider systems have made significant with emergency department patients upon
capital investments, to date these investments discharge.
have not delivered their expected productivity
improvements.15 The evolution toward ecosystems • Integrated network strategy across all provider
presents an opportunity for these providers to types and locations. This strategy ensures
increase their return on this invested capital. that affiliated physicians are able to practice
Leveraging historical—and potential future— at the facility that makes the most sense to the
investments to create a more longitudinal and patient.
personalized care experience could be a potential

10 The next wave of healthcare innovation: The evolution of ecosystems

 • Creation of a network for high-needs aggregators that bring together distinctive
patients. This network will fulfill all of the services for a specific specialty (for example,
clinical needs of the selected patient orthopedics) to support an ecosystem. Providers
segment, for example, focusing physician who pursue this strategic path will need to do the
outreach/recruitment on specialties where following:
patients are most likely to see an out-of-
network provider. 1. carefully consider which specialties or practice
areas they will offer (for example, based on
• Aligned provider incentives. Providers competition trends in those areas, long-term
within the ecosystem of care must realize economic sustainability)
ecosystem-oriented payment arrangements
or joint incentives, such as through joint 2. ensure that there is a clear quality and
venture arrangements. affordability value proposition so that they
have a “right to play” in various ecosystems
2. Re-work the traditional concept of organization curated by others
via “service lines.” A truly integrated experience
will revolve around a patient's holistic needs. 3. ensure that the infrastructure, intelligence,
In the current system, patients transfer from and engagement capabilities they have
one service line to another (for example, from in place can easily integrate into others'
radiology to oncology, to surgery, back to ecosystems
oncology, to social services). A team-based
approach centered around the patient (for Healthcare services and technology players
example, someone with a complex cancer Healthcare systems and technology players vary
diagnosis) will be more in line with an widely in terms of services and offerings. These
ecosystem view, but requires organizational, players vary both across function (providing
financial, and operational changes. services, data and analytics, consulting, and
software and platforms) and topical domain
3. Integrate tools and care approaches that (for example, payment integrity, revenue cycle
address non-clinical behaviors that influence management, care management). As we’ve noted
health status, potentially through partnerships in previous work, amid wide diversity of players
with other organizations (clinical care explains in this segment, large-scale platform players
only about 15 percent of overall health could evolve to create frictionless markets for
outcomes).16 healthcare products and services.17

4. Deploy tools that help personalize the This wide variation means that healthcare services
ecosystem experience for each individual and technology players are naturally positioned
patient. Data liquidity in the infrastructure to participate in emerging healthcare ecosystems
layer and innovation in the engagement layer across different ecosystem layers:
(for example, deployment of digital tools)
will be particularly important to enable this — At the infrastructure layer: healthcare services
personalized experience. and technology players (for example, health
information exchanges and clinical information
For providers that make a strategic choice to be a systems) currently provide data collection,
participant in an ecosystem, it will be important transfer, and management capabilities. As
to have a distinctive value proposition. This means, the layer of infrastructure underpinning
at minimum, providing high-value care for specific healthcare ecosystems matures—including
patient needs. To maintain this value proposition, through the entry of large technology giants—
providers may choose to act as specialty these healthcare services and technology

The next wave of healthcare innovation: The evolution of ecosystems 11

 players can realize value by building capabilities This action requires technical flexibility and APIs
that require healthcare-specific expertise and that interface with other ecosystem participants,
domain knowledge to serve critical functions in especially in the core infrastructure and intelligence
enabling data sets. layers. Additionally, healthcare services and
technology players could create modular solutions
— At the intelligence layer: healthcare services and that facilitate adding capabilities to an ecosystem.
technology players (payment integrity, revenue
cycle management, population health, clinical Finally, although less common than acting as
decision support) currently play a critical role in point solutions, some healthcare services and
converting underlying data to actionable insights technology players may be able to curate effective
for a variety of customers. With the evolution sub-ecosystems (centered on either a specific
of healthcare ecosystems, the opportunities population, such as those with diabetes, or use
for intelligence functions will likely expand case, such as payments). For example, a patient-
materially. As advanced analytics capabilities engagement technology focused on a specific
mature—including through healthcare condition may believe that with given engagement
agnostic technologies—healthcare services levels with patients, it can curate an ecosystem for
and technology players can build off these these patients directly. This approach would require
capabilities and data to develop healthcare- players to bring in underlying data infrastructure
specific insights. These insights can be provided and intelligence capabilities, and curate a complete
to the patient in an efficient and actionable way, or near-complete continuum of digital and physical
while also improving the quality of care. services focused on diabetic patients.

— At the engagement layer: healthcare services

and technology players, including patient Conclusion
engagement, care and disease management, Ecosystems have proven to be a powerful force in
utilization management, and provider reshaping and disrupting industries. Healthcare
enablement, currently play a critical role in ecosystems have tremendous potential to do the
providing information to and changing behavior same and could lead to improved health outcomes
of healthcare stakeholders. As healthcare and affordability by delivering a personalized,
ecosystems evolve, the number and complexity intuitive, and integrated experience to patients.
of points of engagement will continue to expand. In addition, providers would be able to enhance
This expansion presents an opportunity for productivity and engage with a broad set of
engagement organizations to leverage an caregivers.
increasing amount of data and actionable
insights and create value through patient As industry forces combine to drive the
behavior and payer/provider behavior. These technological innovation that enables these
players will need to learn how they can best plug ecosystems, we pose three questions:
into broader healthcare ecosystems to drive
adoption and engagement. 1. What is a clear strategic path (including strategy
for leveraging cross-industry technology
Most healthcare services and technology players services and augmenting those services with
will likely act as (one or many) point solutions healthcare-specific capabilities) that allows
plugging into and providing key functions within a company to benefit from the evolution of
evolving healthcare ecosystems. Therefore, healthcare ecosystems?
these players should maximize the number of
situations/ecosystems where their capabilities can 2. Do healthcare industry stakeholders have the
be deployed. Often, companies string solutions requisite technology capabilities, operating
together within or across topical domains that may models, and talent required across the
stretch beyond a single layer of the ecosystem.

12 The next wave of healthcare innovation: The evolution of ecosystems

 infrastructure, intelligence, and engagement Answering these three questions could help
layers of future healthcare ecosystems? healthcare incumbents and new entrants
successfully realize the potential value at stake
3. Do stakeholders have a structured framework from the emergence of healthcare ecosystems by
to determine whether to build, partner, or improving the healthcare experience, outcomes,
acquire in closing any capability gaps? How and costs, ultimately benefiting patients and the
does this framework consider what capabilities public.
are truly differentiating and therefore should be
owned?

1
“How the best companies create value from their ecosystems,” November 21, 2019, McKinsey.com.
2
Singhal S and Carlton S, “The era of exponential improvement in healthcare?,” May 14, 2019, McKinsey.com.
3
Singhal S and Jacobi N, “Why understanding medical risk is key to US health reform,” May 1, 2017, McKinsey.com.
4
Sahni N, Kumar P, Levine E, and Singhal S, “The productivity imperative for healthcare delivery in the United States,” February 27, 2019,
McKinsey.com.
5
Source: McKinsey Healthcare Services and Technology Domain Profit Pools Model; PitchBook Data, Inc.
6
Examples include: Humana's partnership with Microsoft Azure; ResMD's acquisition of MatrixCare; Landmark Health's multidisciplinary care
approach (See “Humana and Microsoft announce multiyear strategic partnership to reimagine health for aging populations and their care
teams,” Microsoft, October 21, 2019, news.microsoft.com; “ResMed to acquire MatrixCare, expands out-of-hospital SaaS portfolio into long-
term care settings,” ResMed, November 5, 2018, investors.resmed.com); Source: McKinsey Healthcare Services and Technology Domain Profit
Pools Model; PitchBook Data, Inc.
7
Disney has four interlinked business units: Media Networks; Parks, Experiences and Products; Studio Entertainment; and Direct-to-Consumer
and International. Safo N, “How the Disney ‘ecosystem’ works,” Marketplace Morning Report, May 21, 2015, marketplace.org.
8
Examples include Iora Health, Livongo, Omada Health.
9
White J, “What Is SWIFT and How Is It Used in 2019?,” The Street, April 16, 2019, thestreet.com.
10
“CMS advances interoperability & patient access to health data through new proposals,” CMS, February 8, 2019, cms.gov.
11
Henke N, Bughin J, Chui M, Manyika J, Saleh T, Wiseman B, and Sethupathy G, “The age of analytics: Competing in a data-driven world,”
December 7, 2016, McKinsey.com.
12
Savitz EJ, “Breaking up Google and Facebook won’t solve the real issues facing tech,” Barron’s, June 7, 2019, barrons.com.
13
Columbus L, “Microsoft leads the AI patent race going into 2019,” Forbes, January 6, 2019, forbes.com.
14
Abbott B, “Google AI beats doctors at breast cancer detection—Sometimes,” Wall Street Journal, January 1, 2020, wsj.com.
15
Sahni N, Kumar P, Levine E, and Singhal S, “The productivity imperative for healthcare delivery in the United States,” February 2019,
McKinsey.com.
16
Singhal S and Carlton S, “The era of exponential improvement in healthcare?,” May 14, 2019, McKinsey.com.
17
Onitskansky E, Reddy P, Singhal S, and Velamoor S, “Why the evolving healthcare services and technology market matters,” May 3, 2018,
McKinsey.com.

Shubham Singhal is a senior partner in McKinsey’s Detroit office and the global leader of the Healthcare Systems and
Services Practice. Basel Kayyali is a senior partner in the New Jersey office. Rob Levin is a partner in Boston office. Zachary
Greenberg is an associate partner in the Washington, DC, office.

The authors would also like to thank the team who contributed to this paper, including Greg Gilbert, Prashanth Reddy, Addie
Fleron, Safia Ziani, Nicolette Tran, and Kush Das.

This article was edited by Elizabeth Newman, an executive editor in the Chicago office.

Copyright © 2020 McKinsey & Company. All rights reserved.

The next wave of healthcare innovation: The evolution of ecosystems 13