Innovating in Health Care - Harvard Business School MBA Program

Innovating in Health Care

Course Number 2180 (Intensive)

Professor Regina Herzlinger
Jointly listed with SEAS; co-taught with Kevin Schulman
Fall 2014; Q1; 3 credits ; meet on X days from 10:05 AM-12:55 PM
14 sessions; 2 class sessions; Paper/project

Course Requirements

Students are required to prepare a business plan, which employs the framework of this course, to explore an entrepreneurial opportunity in health care, and to evaluate their classmates' plans.

Career Focus

For students interested in careers in entrepreneurial health care management, consulting, and investing.

Educational Objectives

Innovating in Health Care (IHC) helps students to create successful entrepreneurial health care ventures by enabling them to:

  • Identify the alignment between an entrepreneurial health care venture and the Six Forces that shape health care - structure, financing, technology, consumers, accountability, and public policy.
  • Create a business model that responds appropriately to any misalignments. Innovating in Health Care embraces every part of the health care sector, including insurance, services, IT, medical devices, biotechnology, diagnostics, and pharmaceuticals. The course has a global focus with case studies set in Brazil, India, Spain, the U.K., and the U.S., among other countries.

Content and Organization

The course is organized into four modules (see syllabus):

  • In the first, Innovating in Health Care introduces students, through case studies, to the analytic framework of the Six Forces that critically shape new health care ventures and their impact on business models for three different kinds of health care innovations: consumer-focused, technology-driven, and consolidations.
  • The next module uses case studies to discuss each of the Six Forces in detail.
  • The third module discusses case studies of firms that succeeded or floundered in response to their alignment with the Six Forces, typically with the case protagonists present.
  • In the last module, selected students present their business plans to the class.

As an example of the discussion of the Six Forces, one section focuses on how the financing force affects new ventures, i.e., how do innovators get paid? The answer differs from that in most other sectors of the economy because the health care industry in virtually all developed countries is typically financed by a third party, not its users. In the U.S., employers are the primary sources of payment through private health insurance companies. State and federal governments pay for most of the health care expenses for their employees, the elderly and the poor. The health care expenses in other developed countries are typically paid by governments.

The "Note on Financing" explains the overall financing of health care in the U.S. and other countries, the interest of consumers in these financing mechanisms, the different kinds of insurance plans used by employers and government, and the accountability and public policy issues they raise. It is accompanied by case studies of four health insurance firms-one is an integrator (WellPoint). The other three describe entrepreneurial firms which newly offered HMOs (THG), high-deductible insurance (Consumer-Driven Health Care: Medtronic), and vertically integrated health care in Brazil (Amil). The "Note on Health Insurance Coverage, Coding, and Payment" explains how these processes operate for various types of medical technology products and related service providers. Cases about an innovative medical technology company (ABC) and a health service integrator (MedCath) enable students to apply these principles.

Business Plan Requirements

Students must prepare a business plan, which employs the IHC Framework to explore an entrepreneurial opportunity in health care. Some ideas for projects are posted on the course platform but you can devise your own project, as well, after Prof. Herzlinger approves it. Please let Prof. Herzlinger know if you would like to pursue any of the course platform projects for your business plan.

You will prepare a 5 minute presentation of your business plan idea for health care, its alignment with the Six Forces, and the resulting business model. I will randomly select 6 or more people to make this presentation in class. Those selected will need to email your presentation materials to my faculty assistant the Monday before your presentation. Presentations will be in mid-October.

You business plan should cover the following topics:

  • The type of opportunity
  • Six Forces alignment
  • Next steps

Grading

Students are expected to attend every class unless excused in advance in writing. Class participation will account for a significant percentage of the grade, and the business plan will account for the remainder.

Appointments/Correspondences

Meetings with Prof. Herzlinger can be made through her faculty assistant. Appointments are made on a first come, first serve basis. All appointments will require a resume and an agenda two business days prior to the meeting. Be sure to cc the faculty assistant on all class emails.