Bringing Innovation to the Health Care Sector: Modeling Optimal Cost Distribution for Telestroke Services in Germany Franziska Günzel & David Tomczyk Abstract: One of the growing trends for healthcare is the rate of innovation. Telestroke, a costeffective, new innovation, is one of those innovations but its implementation in Germany is hampered due to a lack of long-term financial support. Currently, the parties involved in the investment are not the parties that save money in the aftercare process. Using a Stackelberg model, this paper introduces an alternative model for determining how much each participant contributes to the cost of implementing the innovation using a value-based, rather than cost-based, decisionmaking process. We conclude with discussion regarding how to generalize the model to other innovations.

Acknowledgement: F. Günzel works within the TASC project (Telemedical Acute Stroke Care) and gratefully acknowledges the financial support from the German Ministry of Education and Research (BMBF) within the framework of the program “ForMaT - Research for the Market in Teams” (ID 03F01242).

1. Introduction One of the biggest challenges facing many government supported programs, and health care reform in particular, is the constant need for innovation. The health care industry offers ample opportunities and needs for innovation due to growth in knowledge, new technologies and process improvements, changes in industry and market structure and aging population (McCleary, Rivers, and Schneller 2006). But The main challenge of innovations is not their creation, but rather their dissemination. Innovations come most often from the private sector (REFERENCE), but many hospitals, especially those in Europe, rely heavily on the government and insurance companies for financial support. That is, the entities that use the innovations (the hospitals and the patients) are not the ones who pay for them. As such, in order for innovations to be integrated into practices throughout a country, the innovation must first prove a minimum level of effectiveness to satisfy the government and patients and combine that with noticeable cost savings to entice insurance companies, all while staying within the resource constraints of the care providing entity. This trifecta of expectations complicates the spread of an innovation since a process that only satisfies one or two of the three criteria will not build the support it needs to spread. This paper looks at one such example in the health care sector: telestroke in Germany.

1.1 Health Care Overview Health care and the health care delivery environment are changing rapidly. Over US$ 34,965,336 million, or about 10.5 percent of GDP, is spent on health care

each year in Germany (OECD 2010). In fact, health care expenditures are growing faster than the economy (Weinberger, and Weeks 2006). Although many attribute this growth to the longstanding and visible entrepreneurial activity and innovation in some sectors (biotechnology, genomics, and pharmaceuticals, for example), it is also the result of activity in the service delivery area. Innovations in the service delivery sector lead to products and processes that improve quality of care, accessibility, and continuity of services delivered within and across facilities and communities (Grazier, and Metzler 2006). The lack of awareness of activity in this sector is due in part to entrepreneurial activity in this sector being dampened, less so from a lack of innovation, but rather from a lack of financial support. The result is that, while many ideas survive to a prototype stage and some to pilot implementation, few are actually implemented into standard care, where continuous financial support is needed. One example for this is the introduction of telestroke care in Germany.

1.2 Telestroke Overview Stroke is the third leading cause of death and leading cause of adult longterm disability in western industrialized countries. Alone in Germany every year 260.000 patients suffer a stroke causing 5.4 billion € costs (Heuschmann et al. 2010; Kolominsky-Rabas et al. 2006). Only 45-50 percent of the stroke patients can receive care within a stroke unit—a special treatment unit where stroke patients receive highly efficacious care—due to high investment and running costs and the lack of neurologist (Heuschmann et al. 2010; Pollack et al. 2007).

As compensatory measures, telemedical solutions are increasingly applied within “telestroke” networks to provide neurological expertise from “hubs” to small primary care hospitals (“spokes”) (Audebert 2006; Müller et al. 2006). Studies showed that telestroke is a cost-effective mean for stroke care, but the implementation is hampered since the parties involved in the investment (mainly health insurance companies) are not the parties that save money in the aftercare process (patients and nursing care insurance) (Audebert 2009; Ehlers et al. 2007; Günzel, and Storm 2011). This decelerates not only the implementation process, thus hindering optimal stroke care, but also makes entrepreneurial action within the health care service delivery area unappealing to the point of being a deterrent.

1.3 Goal of the Paper This paper analyzes the implementation process of telestroke care in Germany from a cost-optimization perspective, offering an ideal approach to satisfy all participants in the dissemination process. To achieve this, we propose a change to the underlying logic of thinking about funding in the health care service delivery area from cost-recovery and organization-focused to a value-generation-based approach. Specifically, we use game theory to model the way to distribute costs among all the participants to satisfy the needs of each. Our goal is that this study will add to the discussion about “public entrepreneurship” and offer insight and recommendations for both public policy and firm-level decision-making. We conclude with discussion about the future of public-privat partnerships and how

such partnerships can be used to accelerate the process of bringing innovations in the health care sector.

2. Background As this study aims at exploring new ways to bring sustainable innovative products and services into the health care sector, the literature review in this section first briefly discusses findings in the field of health care entrepreneurship. Next, in order to give in-depth understanding for our case, we provide an introduction to telestroke and its implementation in Germany. 2.1 Entrepreneurship in the Health Care Sector Little research on health care entrepreneurship exists in the literature. There are several reasons for this dearth of research. The first is the unique nature of this sector. Unlike businesses where profit drives entrepreneurship, health care, like social entrepreneurship, possesses a broader societal mission, promoting the health and well being of the public. Thus, differences in structure, financing, culture, incentive schemes, and other key business components are not conducive to rapid changes. Another reason is the lack of financial resources and the need to conform to more proven successes rather than exploring radical changes in medical approaches inhibiting freely pursuing the most innovative projects. Patterns of behaviors and attitudes of health care practitioners are cultivated by organizational mission and culture, rather than personal gains and motives (Guo, and Buss 2006). Additionally, every country has its own health care framework, which makes

international research difficult and cross-country analysis and comparison to some degree impossible. Studies on health care entrepreneurship primarily focus on 1) the physician as an entrepreneur and ethical manager (e.g. Gilmartin, and Freeman 2002); 2) health care organizations as entrepreneurial entities (e.g. Weinberger and Weeks 2004; Phillips, and Garman, 2006); 3) the description of process models to show links between entrepreneurship and health care (e.g. Mccline, Bhat, and Baj 2000); 4) success factors and business models within the field of biotechnology, genomics, and pharmaceuticals (e.g. Bigliadi, Nosella, and Verbano 2005); and 5) research on public policy development to encourage entrepreneurship within the health care sector (e.g. Lehoux et al. 2009; Saltman, Busse, and Mossialos 2002). Most of the studies are purely conceptual and descriptive, trying to match long-standing management tools (for example, Porters Five Forces) to their research questions. There are very few theoretical studies that and even less empirical work that gives insights and directions for future research. The health care and medical science sector have been ambivalent in their support for innovation and entrepreneurship. This is evident in the literature on the history of the relationships between business, profit, and charity (Grazier, and Metzler, 2006). Many authors reflect a philosophical discomfort with organizational relationships that are perceived as compromising the mission of not-for-profit institutions and the rights of citizens to health care at low or no cost (Dawson 2001; Silvers 2001; Relman 1992; Rylko-Bauer, and Farmer 2002). Therefore, health care innovation literature is still in its infant stage. Current publications focused on

barriers that impede the introduction of new products, services, and processes (e.g. Christensen, Bohmer, and Kenagy 2000), the innovation implementation process itself and its complexity (e.g. Mina and Ramlogan, 2008), the diffusion process of innovation and what hampers it (e.g. Fitzgerald et al. 2002), and the financing situation for the health care sector (e.g. Grazier, and Metzler 2006). Authors agree that financing and the complexity of the health care system are the major challenges (e.g. Friedman 2001). Resources are scarce and the introduction of new methods into the market needs a lot of time and effort thus high investments. Thus, a lot of projects are never implemented full-scale. This is mostly due to the fact that a lot of parties are involved but do not coordinate their efforts. This is also true for the case of telestroke in Germany. 2.2 Telestroke Care Driven by personal preferences, national funding opportunities, regional factors, and different foci in stroke acute care, a wide range of different telestroke network concepts has emerged in the last 10 years worldwide (Günzel et al. 2010; Schwamm et al. 2009a). In all telestroke networks, which treats patients in the acute stage, the teleconsultant can view the patient’s brain scan (CT or MRI) that is uploaded onto a server platform via a DICOM interface. Furthermore, the hub is connected to the spokes by a high-quality video and sound transmission link, which allows observation of the patient exam implemented bedside by the resident or attending physician. Having full control of the pan, tilt, and zoom functions of the bedside camera, a technician can perform a thorough clinical assessment of the patient’s neurological status (Handschu 2004). On the basis of these information,

the stroke expert communicates his diagnosis and related therapeutic recommendations to the physician and finally provides a medical report sheet (Schwamm et al. 2009b; Theiss et al. 2010). 2.2.1 Telestroke Care in Germany: Due to regional factors strongly influencing the funding structure for telestroke networks, we will focus in the present study on Germany. In Germany, nine telestroke networks were implemented since 2002, connecting about 100 hospitals and serving around 7.000 patients per year, which is approximately 5% of all stroke patients in the nation (Günzel, and Storm 2011). These networks are different in structure, treatment focus, size, and quality management approach, but in all of them primary care hospital receive teleconsultations from comprehensive stroke centers and all received payments from health insurance companies (see figure 1).

Figure 1: Telestroke network

Unfortunately, all of them are also similar in that they are after all this years still struggling with finances. Yet every year, each network sits together with statutory health insurance companies and negotiates if it will be funded and how much funding is provided in the next 12 months. The negotiated price is based on the running costs of the comprehensive stroke centers and primary hospitals.1 The health insurance companies thus spend even more money for stroke patients because 1) the costs for telestroke care (around 1.600 € per patient) add to the costs of regular care (in average 5.400 € per patient) and 2) more patients will be

The main focus on the part of the hospital is to ensure the well-being of their patients. Offering telestroke services is not meant to be a profit generating service, but rather an improvement of existing stroke care. 1

sent to rehabilitation (around five percent more of all treated patients per year), with 85% of the costs for rehabilitation covered by the health insurance company. The biggest “financial winners” of the improved situation are the patients and the nursing care insurance since they can save the highest amount in the aftercare phase but they are not participating in the costs at all (Günzel and Storm 2011). Since health care companies are paying in the telestroke setting more than before, they are now questioning whether to support telestroke care any longer. The sustainable implementation is hampered even though cost-effectiveness is proven. Therefore, new financing mechanisms and structures need to be designed to help in this situation but also to act as a role model for other innovations within the health care delivery sector.

3. A Game Theory Model of Telestroke To model the fact that not all players make decisions or act at the same time and that all such decisions or actions are made with the full knowledge of what came before while anticipating other player’s reactions, we choose to use a modified multi-stage Stackelberg model. A Stackelberg model accounts for decisions being made sequentially, with the multi-stage aspect describing the fact that the process involves more than just two decisions. The primary difference between our modified model and a classic Stackelberg model is that our model must accommodate the fact that some decisions are made between players simultaneously. Such deviations will be clearly noted in our model.

For this model, we have six stakeholders: the patient, the primary care hospital, the comprehensive stroke center, the health insurance companies, the nursing care insurance companies, and the government having different goals and varying information available (see table 1). Table 1: Participants in the Telestroke Service Processes Party

Description

Aim

Patient

In the acute stage, the patient is a dummy player, not being able to make decisions. He/she pays a monthly fee to the health and nursing care insurance depending on his income, not on risk or service utilization. Treats stroke patients in the acute stage and provides early rehabilitation.

Stay healthy, get the best treatment possible, stay close to home, minimize expenses not covered by insurance companies.

Primary care hospital and comprehens ive stroke center

Health insurance company2

2

Covers (almost) all expenses related to health care for its members.

Improving patient outcomes, maximize capacity utilization, minimize costs not covered by insurance or government, improving the hospital’s reputation, HR satisfaction. Enabling high-quality health care, minimizing expenses and reimbursements, being attractive for (healthy) members.

Available Information His/her past medical history, prescribed medication.

Patient records, routine data of all patients to see improvements/ worsening in care, data provided by the patient/family. Records of all patients over the last years, invoices.

There are 155 statuary health insurance companies and 47 private in Germany (2 nd quarter 2011).

All funds have non-profit status and are based on the principle of self-government, elected by the membership.

Nursing insurance company (also called long-term care insurance)3 Government

Provides financial support for patients who need long-term nursing care after a stroke (more than six months).

Enabling high-quality long-term nursing care, minimizing expenses and reimbursements.

Plans, regulates, and manages health care, promotes health in its constituents, and applies equal health standards throughout Germany.

Minimizing the number of people who cannot work (minimizing tax losses), minimizing costs, encouraging innovations and research in the health care sector.

Information provided by a regional medical review board about the degree of nursing care needed. General statistics about hospitals, funds, and health status in Germany provided by the Federal Bureau of Statistics.

In the following we will first address the current situation which is cost-driven (3.1) and then will model a more complex but value-focused approach (3.2) as a role model for future funding. 3.1. Initiating Telestroke Services—Current Model The establishment of a price for the telestroke service involves right now four entities: the primary care hospitals, the comprehensive stroke center, the health insurance companies, and the government. Note that patients are excluded from this stage of the telestroke process because 1) in the German system patients will not pay for acute treatment directly but health insurance companies will and 2) Due to the bad health condition in the acute stage patients cannot make any decision within the process (e.g. choose which hospital to go to). Thus, a role as a participant in the discussion would be inappropriate. The nursing care insurance are not

3

The nursing care insurance scheme is administered by the sickness funds (as an entity that is separate from the health insurance part but without any separate associations) and by the private health insurers.

participating right now in any way in the process too—neither as a informant, an analyst or payer. Each year, the four parties must agree on the price of the service. Currently, the price is neither market- nor profit-, but rather cost-driven. The price-setting decision process offers an intriguing opportunity to see the existing interactions between public and private parties. The model begins with a primary care hospital deciding whether or not it will be part of the telestroke service network. If the hospital wishes to participate, the comprehensive stroke center will evaluate if the hospital is able to handle telestroke service. Afterwards the primary care hospital can apply to the government for covering the costs of the initial investment required for the installation of telestroke services. However, the money for this process is not unlimited, nor is it spent on medical institutions without the resources or capacity to handle the telestroke services. This does not mean a hospital must already have fully-trained and dedicated staff to receive financial support from the government, but rather that the hospital must be in a position to implement telestroke services if the resources were to be made available. Once a hospital has agreed to participate in the network and it has either received government funding or has committed to pay the investment costs themselves, the telestroke network (comprehensive stroke centers and primary care hospitals) negotiates with the health care insurance companies to set a price. The main focus on the part of the hospital is to ensure the well-being of their patients; offering telestroke services is not meant to be a profit generating service,

but rather an add-on for existing stroke care. The insurance companies, on the other hand, seek to optimize their profit or, failing that, minimize any additional costs. Therefore, the telestroke network will prepare a detailed list of expected costs to be caused in the next year. The insurance companies look at this list really close to avoid any redundancy in funding. The rest of the costs are apportioned to the insurance companies during the negotiations, with the health insurance companies assuming the bulk of the costs since telestroke is usually implemented at the hospital. Afterwards the primary care hospitals and comprehensive stroke negotiate which share goes to which hospital. Below, we provide a step-by-step summary of the current process for initiating telestroke services at a hospital: Step 1: Decision—Primary care hospital—Will the hospital participate in the telestroke network? Step 2: Evaluation—Comprehensive stroke center—Is the primary care hospital capable of hosting telestroke services? Step 3: Process—Government or primary care hospital pays the investment costs. Step 4: Evaluation—Hospitals—What are the yearly running costs of telestroke network and thus price per treated patient? Step 5: Evaluation—Health insurance companies—Which costs are covered in any other way? Step 6: Decision—Hospitals and health insurance companies—What portion of the costs for telestroke services is the health insurance company willing to pay? 3.2 Initiating Telestroke Services—Alternative Model The current model of cost-driven pricing is not the only possible model. Instead of being driven by cost, price-setting could be driven by the value added to a

given entity. In this conceptualization, each entity determines the benefit, defined as any value added plus cost savings, it receives from the implementation of telestroke (see table 2). The government may not save money as a result of reduces aftercare for stroke patients—such cost savings are for the insurance companies and hospitals— but it does generate additional tax revenue from a worker able to return to his or her job earlier. Hospitals see some cost savings from telestroke and gain a greater reputation for being a leader in stoke care, but these benefits may be mitigated or overcome by the costs of additional personnel and equipment needed to run the service. Health insurance would likely see minimal added value as a result of telestroke; similar to hospitals, the additional cost of patients who use the service likely cancels in whole or in part the positive feelings clients have about the quality of the insurance and any savings from reduced time caring for the patients. The entity gaining the most value from telestroke is the nursing care insurance companies who have significant cost reductions since telestroke patients would need much less aftercare. This value is increased by the positive feelings from clients being associated with telestroke.

Table 2: Possible Sources for value creation for all involved parties Party

Possible sources for value creation (tangible)

Possible sources for value creation (intangible) Patient Increased wages (from being Higher quality of life: able to return to work faster), better health status, increased wages due to decreased aftercare time, decreased unproductivity, ability to live at home increased rate of recovery and and not in a nursing care decreased chance for institution, greater complications, decreased costs independence, increased associated with traveling to rate of recovery, and waiting at the hospital for decreased chance for follow-up, less expenses for complications. medication and medical devices. Primary care Ability to bill more € due to Improved image in the hospital and better care, higher capacity medical and national comprehensive utilization due to more community, better instroke center patients. house infrastructure, patients receive better care, satisfied patients. Health Reduced expenses on shortHigher treatment quality insurance term care, lower follow-up for patients (i.e. more company costs (e.g. visits to or by a satisfied clients). doctor), fewer expenses for complications or other illnesses. Nursing Reduced expenses for longIncreased ability to focus insurance term care . on only most critical company need patients Government Additional tax revenues, fewer Healthy inhabitants, expenses from vocational better standing in disability rent or international studies on unemployment payment. health care and outcome (OECD). The second key difference in between the cost-driven and the value-drive models is that patients actually have a role to play in the pricing decision, albeit a passive one, and nursing care insurance companies can even be assigned with an

active one. In a value-driven pricing model, the value to all players must be considered. Assigning a dollar value to the benefit each entity on average earns is no easy feat, and one that would incur much debate amongst the involved parties, especially for the intangible benefits. In addition, the value-added approach would require a valuation of the benefits received by patients. Fortunately, telestroke has existed for multiple years, with recorded data kept by the hospitals and insurance companies. Based on this data, all of the entities can evaluate a quantitative value for each benefit: cost savings, gains in productivity, and reductions in recovery time and expense can be compared between cases that do and do not use telestroke, while any positive impacts to the entities, such as an increase in number of customers, have been tracked over the preceding years. Using this data and the actual cost of the program, the government, hospitals, and insurance companies can determine who benefits most from the implementation of telestroke and can apportion the costs of the program to each entity based on the value they receive. A complication arises when considering patients. Although patients do realize substantive benefits, in the current system in Germany, patients do not pay for their health services directly. Instead, they pay insurance premiums, and the health insurance companies cover all health-related expenses. In addition, patients are not part of the initial discussion in this process except by proxy through their data.

At this point, each entity has the option of determining whether or not it will participate in the process of telestroke services, except for patients. Patients will have the choice of whether or not to participate in the process during the implementation stage, which means they are the last movers in this model, having the final decision after everything is done to participate in the process or not. Instead, the four entities—the government, the hospitals, the health insurance companies, and the nursing care insurance companies—make a decision about pricing, using their best judgment of how the patients will act. Each entity would rather not pay anything towards the implementation of telestroke while still reaping the benefits. However, this is complicated by several factors. First are the patients. Patients are not necessarily fully rational entities, and they have been conditioned by the German health system that health-related costs are paid by the insurance companies and the government. As such, they may balk at telestroke services if there is any cost associated with the process, which means any potential savings and increased value faced by the other four entities would be lost. Thus, assigning all or part of the costs to the patients, although optimal in a purely rational model, may actually prevent the use of telestroke. The next-to-last movers in this model are the hospitals. Although they expressed desire to implement telestroke services in order to bring the government and the two insurance entities to the discussion, hospitals have no requirement to follow through with the establishment and use of telestroke services. As such, they can reasonably threaten to not implement the services if assigned any of the costs.

This leaves the government and insurance companies, who all move simultaneously. All of the entities want to realize the added value of telestroke services. However, the simultaneous movement means that they must negotiate an agreement that all three parties view as fair. The most rational approach is to divide the costs proportionally based on the value added by the telestroke services. Were any of the parties to remove themselves completely from contributing to the costs, the other two parties can threaten to not contribute either, resulting in no telestroke service, a non-optimal outcome. Some negotiation as to what exactly constitutes a fair distribution may occur at this stage; such is to be expected when the total value of the service cannot be fully quantified. However, the three entities will reach an agreement, thus allowing telestroke services to be implemented. Given the revised method of determining the cost to each entity, we propose the following model: Step 1: Decision—Hospitals—Will the hospital participate in the telestroke network? Step 2: Evaluation—Comprehensive stroke center—Is the primary care hospital capable of hosting telestroke services? Step 3: Evaluation—All entities—What is the value gained from telestroke services? Step 4: Evaluation—Hospitals—What are the investment and yearly running costs of telestroke network? Step 5: Decision—All entities—What portion of the costs for telestroke services will each entity be responsible for? Step 6: Evaluation—Government, hospitals, and insurance companies—How does the increased value and cost savings compare to any costs the entity incurs in implementing the program? Step 7: Decision—Government and insurance companies—What portion of the total costs will each entity pay?

Step 8: Decision—Hospital—Will they participate in the telestroke program? Step 9: Decision—Patients—Will they participate in the telestroke program? 4. Discussion For health care delivery systems to improve and for innovation to flourish, health care organizations must provide the incentives and culture to encourage risk taking and innovation from all participants in the process, including the private sector. The model posited in this paper introduces an alternative model for determining how much each participant contributes to the cost of implementing the innovation, using a value-based, rather than just a cost-based decision-making process. However, these two models are not the only ones available. Indeed, models could assume extremes. The cost could be assigned to only one entity, such as the government, or the last person in the consumption chain (e.g. the patient) could be stuck with the total cost of implementing the innovation for each case. Neither of these is an optimal solution, though. The former discourages the entities funding the dissemination of the innovation since one will have disproportionate costs to benefits ratio. The latter raises ethical concerns as life-saving innovations would either be denied to people who do not have sufficient resources to cover the cost of implementing the innovation or the decision is rushed as the patient has a limited time window—sometimes as short as a few seconds—to make a decision, depending on the critical nature of the problem and speed with which the innovation must be implemented.

This last consideration connects to the need when deciding the cost distribution to carefully consider each participant’s perspective; any participant that does not realize significant benefits from the innovation is not likely to support the diffusion of the innovation throughout the system. This means that market forces, if not considered early in the process, could prevent a potentially vital upgrade to the health care industry from benefiting patients. All in all, the model in this paper accommodates this challenge by paralleling the approach used by partnerships between multiple private entities while accommodating the unique challenges inherent in the medical system. Therefore it could act as a role model for innovations within the health care delivery sector. 5. Conclusion The health care industry offers ample opportunities due to growth in knowledge, new technologies and process improvements, changes in industry and market structure and aging population for entrepreneurial activity (McCleary, Rivers, and Schneller 2006). But balancing costs, quality, and access presents unique challenge for each stakeholder with regards to promoting the health and healing of its consumers is a difficult tasc. Health care entrepreneurship will become more important in practice, and thus it should be analyzed more in research. Our study on cost-sharing to promote innovations within the health care delivery sector is a first step to ground future funding approaches theoretically and builds a starting point for further research as well as implications for practice. Implications for Research

The health care sector is quite different from other sectors, and accepted models from other fields may not be easily adaptable. Thus, quite basic questions need to be addressed first to build a strong basis for this field. For example, how should value creation in the public interest be defined, and how can innovation in the public interest be measured? Given the ambiguity in defining the public interest, can these constructs be usefully operationalized? Does the experience of the private sector provide relevant lessons in this connection? Are there links that can be used between social entrepreneurship—where multiple objectives are balanced—and health care entrepreneurship? Is it possible to integrate objectives such as distributive equity and procedural fairness with those of operational efficiency and effectiveness to develop a unified conceptual framework for assessing new means in the field of health care? Little empirical work has been done in the context of health care entrepreneurship. As a result, there is a great need for research validating or refuting the theoretical models that currently exist in the literature. Whether the focus is on particular illnesses, technologies, disciplines, or sectors of industry, further research may yield ways to promote the growth and dissemination of innovations. Cross-sector studies could prove especially useful as lessons learned and best practices from one sector of health care should be applicable to other areas due to the similar participants. In addition, the Stackelberg model we use in this paper is just one option to model the given situation. Cooperative game theory could also be interesting. It could be assumed that all the participants are characterized by a basic common

goal—improving stroke care, combined with a complex decentralized decisional organization. In light of cooperative game theory, a telestroke network could then be seen as a coalition of partners pooling their resources and sharing the same utility function. The partnership building problem could then be modeled as a cooperative game, and possibilities for coalition and allocation patterns for tasks and rewards could be analyzed. Implications for Practice Health care promoting entities should switch their point of view from costbased to value-focused thinking. Value creation analysis could become a cornerstone because it is the first step to understanding innovation potential and how to involve all parties in cost distribution decisions. Thus, it will help accelerate the diffusion of the innovation-to-market process. However, this proliferation requires planning on the part of all participants. For negotiating these complex solutions that help multiple entities while minimizing their costs, it may be useful to request the aid of impartial outside parties. In addition, for cases where the patient is not in a time-sensitive or life-threatening condition, involving the patients in this process could better distribute the costs across all of the beneficiaries of the innovation without forcing patients to accept costs they may not be able or willing to accept. Another area our model indicates could be worthwhile to explore is building public-private corporations for delivering health care services. Currently, there are few companies who specialize in medical services that help reduce costs to insurance companies. Many services focus on helping the patient first and foremost,

which as a side benefit sometimes reduces the costs to the insurance companies, but not always. While the need for these companies will not diminish, a new market of businesses may need to grow alongside them. Since the insurance companies and the government are the primary source of funding for the various medical services, they are always looking for ways to reduce costs without impacting the health care provided to patients. As a result, a new company would gain a competitive advantage if it were focused on reducing costs to the entities paying for the various medical services first while still improving medical care as a secondary consideration. At the other end of the spectrum, public policy makers need to recognize their role in promoting innovation. By supporting cost- and risk-sharing approaches, public entities could help to bring innovations faster to the market. This is especially true for incremental innovations as they are the primary form of innovation in health care management. In addition, public policy should support entrepreneurial behavior and thinking as well as lower burdens for innovation dissemination in the health care sector to be able to better face the challenges of the aging population in western industrialized countries. One way to do so would be to include entrepreneurship into the curriculum of medicine and public health students. Medical staff—being at the center of everyday problems within the health care service delivery area—is most likely to identify ideas for incremental innovations. Health care entrepreneurship education could encourage opportunityoriented thinking as well as the success rate of bringing incremental innovations to the market. Additionally, the implementation of award schemes that reward

proactive thinking and behavior could encourage medical staff to act more entrepreneurial.

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