Mark Smith, MD — Chief Innovation Officer of MedStar Health

Catalyze: Thanks again, Dr. Smith for joining us today. We are going to be talking about innovation today and about innovation at MedStar. Also, I think about some of the work that you are doing at 1776, and it’s particularly interesting. We’ll also talk today about some of your background and especially now that you are a startup judge. Would like to hear the types of things that you are looking for from developers or new companies.

Let’s start out about how the innovation center works, or how the innovation center operates within Medstar.

Dr. Smith: Maybe the best way to start is to provide some historical context for this. I’m going to dial the clock by to 2009. I was head of emergency medicine for MedStar at the time. The CEO of MedStar is Ken Samet and he came to the following realizations or foundational principles:

1. Health care is changing so rapidly that if MedStar was going to flourish and serve our patients and families best, we’d have to put a high premium on innovation. We’re a big not-for-profit healthcare system in the Mid-Atlantic with about 30,000 associates and $5 billion [in revenue] in the Baltimore/Washington area. We are actually the largest clinical provider of care in the Baltimore/Washington area market. But we are all busy.

2. So, the foundational principle that he and I both realized simultaneously is that the tyranny of the daily trumps the pursuit of the remarkable. That was a reason to try and set up a countervailing force, which turned out to be the MedStar Institute for Innovation.

3. The third premise or foundational principle is that there is a large amount of untapped, under-tapped, creative and intellectual talent and capital at MedStar, but it’s kind of wandering without people knowing each other, like they’re a little lost in the desert, and it needed an attractor in the complex system sense of the word — an organizing force. That also became part of the rationale for setting up the MedStar Institute for Innovation.

We were chartered in 2009 — a couple of interesting things about that. First, we were going to call ourselves the M-I-I (MedStar Institute for Innovation), but the Nintendo Wii has the MII as your avatar, so we then went to MI2, which we fell in love with very rapidly, in the spirit of MI5 and MI6 in the British security services. So, we are MI2 and our address, interestingly enough, is 3-double-oh-7 [3007] Tilden Street. It’s really of a piece here.

What Ken said in the very beginning, which was humble, wise and profound was, “If I know what the MedStar Institute for Innovation is going to be, it’s not going to be very innovative.” First, it was a recognition that the world is changing so fast that if you try to plan and go for a direct target, that’s almost the antithesis of innovation. You must have this ultimate adaptability. And the second is that it was a humble statement. Even as the CEO, he didn’t have all the answers and needed lots of different people with perspectives and viewpoints to help chart the course for MedStar.

We’ve been in existence for five and a half years. One of the important pieces of this is that Ken asked me to be the director for the MedStar Institute for Innovation. In that role, I report directly to him. And insofar as we have been successful, having an innovation center within a healthcare system report directly to the CEO makes a big difference in how it is perceived among the whole organization — from where you sit on the whole organizational chart, as well as the capacity to cut through the multiple levels of approval bureaucracy to move fast. I think it was the book “Change by Design” by Tim Brown that said that one of the measures of innovativeness in an organization is how fast you can prototype something, how fast you can go from having an idea to trying it out. To do that, you have to be able to cut through the typical controls in most large organizations.

Catalyze: You had some great quotes in there and something about sort of having this, I don’t want to say oppositional force, but sort of separate force, which is maybe not focused on the day-to-day and thinking about what’s coming next. How does [MI2] reporting directly to the CEO, how does that work in testing, assessing and building new ideas or new solutions and then transitioning that into the mainstream at MedStar?

Dr. Smith: That’s a great question. It’s taken us several years to kind of figure out how to function most effectively. We started out, we spent a lot of time on this coming up with our mission statement, which is five words: “Catalyze innovation that advances health.” There are three key parts to that:

First, there was the word catalyze, because it’s not that we are going to innovate and the rest of MedStar is going to be doing their daily roles of providing clinical care, but that we were going to — like in a chemical reaction — enable innovation to occur, but live to catalyze another day. So, our goal was to try to raise the energy level across the organization, with the goal of building a vibrant innovation ecosystem across MedStar.

The second interesting thing about the statement “catalyze innovation that advances health” is that we chose health, not health care. It is not “catalyze innovation that advances health care,” but the focus that MedStar has on the people we serve — the health of our patients and their families.

And finally, the third piece are two words are not in that mission — which are the words “at MedStar.” We like to think that we are going to come up with things that are going to be of value far beyond the boundaries of local, regional and even global. That still doesn’t mean we don’t have to demonstrate the provision of large value back to MedStar, otherwise like any large organization, you don’t get a budget for the next year.

We do think that we have our heads firmly on the fact that one of our principles is that there’s always a better way, which is by the way why I never like to use the words “best practices.” There are better practices, because next year, there are going to be different ones coming along the line. And so we’ve got this sort of fundamentally optimistic view of the future.

Catalyze: When you think about the difference between innovation and improvement or innovating and improving, how are you thinking about as an innovation center within MedStar, like you said you are sort of catalyzing these reactions and then moving on to another day but sort of catalyzing the resources, the knowledge, the things that your practitioners and other people are seeing on a day-to-day basis. How do you differentiate between incremental improvements versus true innovations?

Dr. Smith: That is a great question and one that we’ve done a fair amount of thinking about here. If our goal is to catalyze innovation and to foster innovation energy – you can’t create energy because that violates the first law of thermodynamics – you can help unlock and unleash potential energy that exists among all of our associates. Let me offer you a continuum, which actually starts with consistency.  You know what the right thing to do is, like wash your hands, but only 75 percent of the time are you doing it. That’s the reduced variation to get to 100 percent. Execute what you know is the right way, but better. That is one mode of change that you need to institute in a positive direction — it’s not what we do, but it’s essential for an organization that’s going to be constantly improved. The second one on the spectrum is improvement. There are a number of innovation centers which I think actually focus more on improvement than innovation. Improvement if you think about it is incremental; it’s changing processes, maybe doing for example a lean analysis of a process and removing waste. That constitutes improvement.

Now how does innovation differ? Innovation differs in the following way. First of all, innovation is not just an idea, it actually has to be a practice. It could be a device, it could be a process. It could be a business model. It has to be different and novel, but different and novel in a discontinuous way. That’s the big difference between improvement and innovation. Innovation represents kind of a jump shift — a discontinuity from the way things had been done in the past. And finally, it has to add value. Just because something is discontinuously different, it has to make a difference. So, one of our sort of pithy definitions of innovation is that it’s a discontinuous difference that makes a difference. We are really looking to not defy, but question conventional wisdom. By all these different techniques, whether it’s intersectional thinking or looking at other industries for ways that they are solving similar problems. We have a number of these rules of where to look for opportunities for innovation. Every time you encounter something, you should say to yourself: I can’t believe they designed it that way. Or when something hasn’t changed in 40 years, it’s either a terrific design, like the paperclip, or the safety pin, or the tape measure, or it’s crying out for innovation and we don’t even realize it.

In fact, one that hasn’t changed in health care in 90 years is how we document care. We take care of patients, provide care, and then we document the care we provided. And we document it pretty much the same way we always did, which is using words, text. We write it, then we type it, then we choose from pick lists. The world has gone by. The world is passed that. It’s using images and full motion video, and we have to figure out a way of integrating that technology so that the documentation of care is a byproduct of the actual care that we are given, in a way that gives you a really three-dimensional view of the care that’s provided.

Catalyze: I actually thought for a moment that you were going to reference the medical education Fleischner report, but I guess that’s about a hundred or something years old now.

Dr. Smith: That’s another one actually. I think schools of medicine are realizing that. It’s a lot of that traditional curriculum. One, you can do a lot better, especially with a lot of the modern information tools that are there. So, we are looking for things that are discontinuously different.

What we realized. Although, I started to say that what we do at the MedStar Institute for Innovation first and foremost is to try to foster this innovation energy to try to catalyze this vibrant innovation ecosystem. We recognized early on that there actually are some white space areas that we could develop technical expertise and fairly fast that could make a big difference in how patients are cared for.

I’ll give you a good example was in 2010, an emergency physician walked into my office looking for a job, and we were talking and I asked him what he wanted to do in addition to taking care of patients. He said, “Well, I want to build the best center for human factors in health care in the country.” My response to that was, “What’s human factors?” Once he explained it to me I just didn’t know the term, I understood the concept, but while it’s something that is applied in other industries, it hadn’t been applied in health care, which is where there are huge amounts of safety risks exist for the people we serve. After spending about an hour describing it to me I said, “That’s a great idea.” So we set up The National Center for Human Factors in Healthcare, which right now is actually the largest and I think the best center for human factors in a healthcare system in the country. We have $7 million in NIH grants. We consult in every serious safety event that occurs in the organization. We are part and parcel of our Institute for Quality and Safety in MedStar that is trying to take us on the path of being a high reliability organization. That’s a great example, so we have a number of other domains that we didn’t anticipate. And that’s when I said earlier if Ken Samet said if he knew what an institute for innovation was going to be it wouldn’t be very innovative.

I have really come to a philosophy that the planners among us are not going to like because I want to recommend a book, which I think is probably the best book that I’ve read in the last five years, the most thought provoking, as well as a terrific talk. It’s a book by Ken Stanley, “Why Greatness Cannot Be Planned: The Myth of the Objective.”

Countless treasures are buried along the path to nowhere in particular.

You need to be open and adaptable to new things that are coming down.

And, one thing leads to another, leads to another, and if you maintain that openness and curiosity, great things can result.

The most important issues at the MedStar Institute for Innovation, interestingly enough — none of them were planned, and all of them actually occurred because of a personal relationship. So the human connection between people often gets somewhat short schrift. Our relationship with the Cleveland Clinic, our Innovation Alliance, our relationship with 1776 — Human Factor; we have a Center for Influence, Engagement and Health — the relational dimension of care in addition to what everyone else is looking at which is the technological and the transactional.

A lot of these things we kind of stumbled upon and recognized there was huge need, huge opportunity and we could make a difference.

Catalyze: Are all of those sort of initiatives coming out internally from MedStar, or are as an innovation center are you also sort of going out and finding external innovators or external new innovations, technology services, whatever it might be and bringing those in house?

Dr. Smith: That’s a perfect set up because we’ve already talked about the catalyze part of our mission. I’ve talked about the innovate part, which we didn’t even realize in the beginning, but we have these domains like Human Factors and Influence, Engagement, Digital Health and Data Science, where we are innovating, but the third piece, which we also didn’t realize when we got ourselves set up, is the “connect” piece. The kind of foundational premise of that is the following:

If you talk only to yourself, you stay the way you are.

If you talk only to others in health care, you move with the pack.

It’s only if you talk outside of your domain that you can leap boundaries.

We realize that there’s a huge world out there with a lot of intelligent, smart, creative people – a lot of entrepreneurs. They have all the ideas. They’ve got the drive and the ambition, but what are they missing? The clinical environment to validate and test. They come knocking on the doors to these big healthcare systems, but what door do they knock on? It’s kind of a big fortress. Everyone is occupied, rightfully so, with their position, their job; we sort of stumbled upon this like we stumbled on a lot of things. We have become the de facto gateway or portal to the outside for MedStar. It’s both companies, large and small, because I’m convinced that there are two different kinds of collaboration — start-up entrepreneurs and large companies that are really going to move the ball to use a sports metaphor. That’s been a tremendously energizing and exciting aspect of what we do.

Catalyze: That is interesting, because you’re exactly right. You feel like you talk to start-ups and they have clinical champions, they might have IT champions, they might have revenue cycle champions. It’s sort of a broad list and, like you said, it is sort of a fortress, this black box. When you guys do have conversations with startups, what are the things that you go through at MedStar to assess or set up pilots to test things?

Dr. Smith: I wish I could tell you that we have a very rigorous fixed process, but we don’t. We try to operate by one of my favorite processes of complex systems, which is simple rules. We try to talk to everybody at least once.  We don’t always succeed. We have a number of people at MI2 who are our open door outreach people. They are trying to keep their pulse on what’s out there in terms of startups. We look to see if what somebody has resonates with a problem or an issue that MedStar has at the moment. Remember, we’re not an operational entity; we’re a catalytic entity. I may find a startup that has what I think is a good idea that is a 1776 company that monitors pregnant women for weight, blood pressure, with that information connection back to their OB’s office. That may look promising to us, but what I think of it is not the most important thing. It’s what the OB service thinks of it.

One of the nice things about where we sit is that we are connected to everybody in MedStar. We can easily go call or email or find and say, “Is this something you might be interested in. If their answer is yes, we broker that together. If the answer is no, we try never to push stuff. I’m a real believer that I don’t want to spend one iota or one scintilla of energy trying to convince someone that I have something that is good for them that they initially don’t want. I would rather have all that energy go to building and creating the positive. There’s a lot of hungry, curious people who love the idea of trying new things and have these problems and jump on these ideas, so that’s how we serve as a kind of middleman or middlewoman, middleperson, kind of a broker. We have a number of pilots across the organization with a number of startup entrepreneurs whose products we found particularly interesting and niche problem solving.

Catalyze: One of the specific topics, I feel like every time you talk about innovation, you talk about incremental improvement versus innovation, something that always comes up is the shift from volume-based care to value-based care. So can you talk about how that transitioning is starting to take place within MedStar? Then, talk a bit about timelines and expectations within the industry as it starts to think about that transition.

Dr. Smith: The metaphor that I like to use is that we have been in this fee-for-service, pay-per-view environment with a complete misalignment of the desired clinical outcomes and the reimbursement model because the more health care facilities and providers do the more they benefit financially, which leads to any number of things, perhaps to procedures that shouldn’t be done, or the choice of something that is higher reimbursement or lower reimbursement — there are all kinds of studies to that. We are now moving to this subscription service — the old HMO model of per patient, per month – with an intermediary stop. It may be fee for service, but you are going to get part of that fee based on the quality that you render. Like many things, it’s moving. It hasn’t moved quite as fast as I thought it was going to move, which is true for a lot of these trends, but I do believe there’s a kind of inflection point and in three to four years we will see a major difference.

MedStar is about a $5 billion operation and about 10-11 percent of our revenue now is coming from insurance premiums. So we have Medicaid managed care, Medicare Advantage, a health plan for our own associates for which we take the risk; we fully expect that to be going in the 15-20 percent range in the next year or two. We are definitely seeing this change. I think it’s good; I think it’s promoting quality, it’s sensitizing everybody, it’s making the outcomes more transparent. At the same time, it’s coinciding with what you alluded to as the digital revolution. Many more tools being put directly in the hands of patients, or people I should say, to empower them and entry of lower cost providers.

Another thing I think is going to be happening, as big systems like us start taking the risk, we’re going to move from being, which was our genesis and the genesis of most big healthcare systems, a collection of siloed acute care hospitals, treating the acutely ill and injured — patch them up, fix them up and help get them over the hump of that serious illness and get them back home. And then, we’re moving gradually, let’s figure out how we manage chronic illness better. That’s all in some sense below the health line, and I think we are going to be seeing more emphasis on health and wellness.  There’s a huge amount of discretionary income that people spend on themselves to stay well. There’s science behind that. I think organizations like us will try to provide a platform for care. Not only is it a financial incentive, but it’s our ethical and correct incentive for positioning ourselves as a health and wellness company, in addition to an acute illness and injury company.

Catalyze: Tied to what you said earlier where it’s been 90 years and no change in the realm of documentation, do you see the need to shift the way the care itself is documented? Presumably there’s going to be a lot more people providing care and documenting care in different settings, not just physicians in offices and acute care settings. There’s going to be a lot more people involved in the care process at that point because you’re talking not about care even as much but about health. I’m curious if you see those shifts happening as well.

Dr. Smith: We have a very expensive healthcare system. Part of the ways of finding efficiencies are to let machines do stuff, or let the patients themselves do stuff. Like at airports, we now check in ourselves — things that systems had to pay for before. That’s a reason to look at the whole documentation end and see how we can automate it and make it less expensive. More importantly, we are seeing the patient becoming more and more at the center. This is my hunch and I know this is probably contrary to the perceived wisdom going on. I still think that the answer to health information exchanges is for patients to be the guardians of their own health record. They are the center and they make it available to the providers. Right now there are systems like that but they are very cumbersome. That will hopefully change. With tools to help you organize your information and give you visualizations on it, make it available to providers. There are so many lacunae of information that add huge expense – repeat tests, incorrect decisions – because the provider where you are at does not have an open view of what’s happened to you before. You probably yourself don’t have that because we all suffer from the pinhole myopia of the present. We sort of know what we did today, maybe last week, but if I ask you when was your last stress test, when was your last colonoscopy, you probably can’t come up with that. That should be residing in something easily accessible to you that you can call up immediately.

Catalyze: Do you think patients at MedStar are starting to feel the effects of them being more at the center of care?

Dr. Smith: The thing about MedStar is that it is a complete microcosm of health care in America; it’s a fractoid. We have well-educated patients. We have patients who are not so well educated, indigent patients, middle-class patients, wealthy patients — we have the full spectrum. For some parts of the population the answer is yes. For other parts of the population it probably hasn’t changed that much. I’m actually convinced it is going to change for everybody.

Let’s take smartphone technology. That has gone everywhere. There’s no discrimination. Whether you are urban, suburban, rural, wealthy, middle class, everyone has it. There’s a universality to that kind of technology that I think will be a great leveler for us. I love Eric Topal’s book, “The Patient Will See You Now.” It’s a great expression of the reversal of the power position here.

Catalyze: It’s impacting certain segments of the population where others might not have seen it yet.

Dr. Smith: I talked about what some of these startups need. They need a sandbox; they need a reality check. This is every man’s or every woman’s healthcare system. If it works in MedStar, it will work everywhere, because we are like parts of the healthcare system from the highest of tertiary care to basic primary care. It’s a full spectrum. That’s what makes it such a challenging and such a wonderful place to work.

Catalyze: It’s a constant challenge, right? The variation is extreme and I guess if you guys have representation across the board, you guys are dealing with that variation.

Dr. Smith: It’s funny that you say that because we actually have these different sayings on our walls in the office. One of them came from the person that was the president of MedStar Georgetown University Hospital, Rich Goldberg, which was: No variation, no innovation.

Catalyze: I really appreciate you taking the time today. This has been incredibly helpful and insightful to hear you talk about innovation at MedStar and thinking about it as a broader ecosystem or systems shift.

Dr. Smith: I thoroughly enjoyed our time together. Thank you.