Innovating in Health Care

Course Number 2180

Professor Regina Herzlinger
Winter, 29 Sessions
Paper

Career Focus

For those interested in entrepreneurial health care management, consulting, and investing

Educational Objectives

Innovating in Health Care first enables students to identify the alignment between an entrepreneurial health care venture and the Six Forces that shape this sector - structure, financing, technology, consumers, accountability, and public policy - and to create a business model that responds appropriately. Innovating in Health Care covers these issues in every part of the sector, including insurance, services, IT, medical devices, biotechnology, diagnostics, and pharmaceuticals.

Content and Organization

Innovating in Health Care introduces students to the Six Forces that critically shape new health care ventures - structure, financing, technology, consumers, accountability, and public policy - and their impact on business models for three different kinds of innovations: consumer-focused, technology-driven, and consolidations. The course proceeds from this introduction to the framework to a module which delineates each of the Six Forces in detail. It concludes with case studies of firms that succeeded or floundered in response to each of the Six Forces.

For example, one section focuses on how the financing force affects new ventures, i.e., how do innovators get paid? The health care industry worldwide 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 healthcare expenses for their employees, the elderly and the poor. In the ROW, the health care expenses of developed countries are typically paid by governments. The "Note on Financing of the U.S. Health Care Sector" explains the overall financing of health care in the U.S., 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. This note is accompanied by cases that describe business models in the insurance industry and entrepreneurial ventures within it. 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. Two medical technology and health services cases illustrate payment challenges. The concluding module focuses on case studies of entrepreneurial firms, typically with the case protagonists present.

Students must prepare a business plan in this course, which employs the framework, to explore an entrepreneurial opportunity in health care and evaluate each other's plans.