The Changing Healthcare Ecosystem and a “Systems Thinking” Approach

By Tim Bosch

Systems thinking is a disciplined way of thinking beyond the traditional boundaries of a product, and considers the complete flow of information or activities across a cooperating set of systems and human interventions to complete an intended job. For healthcare, this includes the span of activities for people, devices, information systems, and processes needed to meet various clinical and home healthcare scenarios.

The healthcare industry ecosystem is changing–with potentially radical implications for your products:

  • Payers and governments are exerting greater influence than ever before on healthcare costs through new models of incentives, reimbursements, coverage choices, and expectations of electronic records exchanges to streamline care delivery. 
  • Patient-consumers are demanding greater control and choice over healthcare delivery empowered in part by emerging/disruptive technologies like smartphone apps, social media, smarter devices, and greater access to information. 
  • Investors and shareholders are looking for companies truly differentiated in the marketplace by their focus on patient-centric, payer- savvy solutions that demonstrate real improvements to health outcomes, cost savings, and innovative value-driven capabilities and services. 

The distinctions between medical devices and information systems are getting blurry, with devices increasingly managing more data and information systems increasingly connecting directly with medical devices; and value is rapidly shifting from standalone devices and information systems to integrated, interoperable device-electronic records-health information exchange capable solutions that directly contribute to better care outcomes. In light of all these ground shifting changes, how can you make sure that your product development efforts are focused in those areas that provide the greatest value? It all starts by adopting a systems thinking approach to your product and the environment in which it operates. 

Systems thinking is a disciplined way of thinking beyond the traditional boundaries of a product, and considers the complete flow of information or activities across a cooperating set of systems and human interventions to complete an intended job. For healthcare, this includes the span of activities for people (patient, care provider, care payer, others), devices, information systems, and processes needed to meet various clinical and home healthcare scenarios. Systems thinking is an approach in which the goal is the synthesis of a whole product solution as opposed to a focus on a system decomposed into solution components. Where other techniques focus on breaking down a problem into smaller constituent parts, systems thinking takes an expanded view to understand the set of relationships and interactions needed to create a complete solution–or to fix longstanding problems. This unconventional way of thinking often produces significantly different results than traditional approaches, especially for situations involving dynamic, complex flows with multiple points of human and other system interaction. 

Systems thinking – Basic principles
The principles of systems thinking address:

  • Purposefulness – capturing not only what your product does or intends to do, but understanding why the users and other stakeholders do what they do with your product within the context of completing their tasks and activities. 
  • Composition – the ability to reach the right compromise among seemingly contradictory needs and interdependencies. Some of these opposing needs are well known: security v. performance, customization v. standardization, and others. Some are more subtle–but the point is always to achieve the right balance among the full set of these needs. This requires a holistic view, for this balance cannot be managed by any individual component of a system alone. In addition, the relationship of your product with other products and systems within the ecosystem will change over time, and this evolution needs to be anticipated. 
  • Connectedness – understanding the behavior and value of your product within the context of the ecosystem within which it operates, and to understand the influences and implications of that ecosystem on your product. The concept of “connected” here addresses the inter-connected, inter- operable nature of your product or system in the overall delivery of healthcare. 
  • Perspective – the ability to see that actions intended to produce one outcome actually cause the opposite results. For example, an HIS vendor added capabilities to allow the end user to self-customize and self-configure the product, ostensibly to reduce support and development costs. The result– customers were so confused by the complexity that the vendor ultimately had to add support staff (and cost) to train and help configure the system for each customer. 
  • Emergence – the result of the set of interactions within your product that can yield additional capabilities and values that are not always apparent on first consideration. For example, one RIS/PACS vendor added remote diagnostics and monitoring to reduce customer and field support costs. While this achieved its immediate goal, it “unexpectedly” led to the ability to inform customers of work queue challenges and patterns of use among radiologists and technicians in a way that provided great value to the customers. 

Why use Systems Thinking?
Systems thinking expands the choices for solving hard, complex problems by providing approaches to adjust your “mental models” of both the problem space and the solution space. Existing mature products are especially susceptible to disruptive innovation when faced with changing ecosystems such as the changes happening in healthcare today. For example, one vendor of hospital and clinical information systems encountered tremendous problems when trying to move their mature client- server product to the cloud – they needed to rethink security, data integrity, customization, software upgrade, and a raft of other needs. Stepping back and taking a systems thinking approach allowed them to more quickly see how all these challenges were connected and to understand the impact of each solution decision on the whole, more quickly and comprehensively resulting in a superior product solution. 

Systems thinking provides a rigorous way of aligning stakeholders, purpose, process, and expected behaviors to drive solution development. It provides these benefits:
Solve complex problems, by bringing a consistent big picture view to all stakeholders that focuses on the prioritized value needs of the complete solution.

  • Address recurring problems such as those that arise from ever increasing technical debt and changing expectations. 
  • Ensure higher quality early stage product conception and design: 
  • Integrating multiple stakeholder perspectives in the process 
  • Creating a shared understanding of the overall problem and the solution purpose 
  • Establishing value-driven priorities to guide architecture, design and development 
  • Identify where you may need to partner to address capability or core competency challenges; and 
  • Identify additional (often hidden) business value and opportunity. 

When to use Systems Thinking
Systems thinking “intervention” is most appropriate in these situations:  

  • Conceptualization or “ideation” of a new or next-generation product; 
  • Ongoing chronic problems with reliability, support, upgrades, maintainability; 
  • Cost of goods or cost of development challenges, brought on by hardware/software obsolescence or third-party changes that require “value engineering” to re-align the product with business goals – for example, a database product where license costs have tripled; 
  • Need to shift or add focus and context – such as solutions that need to address patients and payers as well as providers; 
  • Inclusion of or movement to “disruptive” technologies – cloud, mobile, social media, and so on; 
  • Need for higher level interoperability with other systems than previously provided – the difference between merely sharing data and exchanging semantically rich information; 
  • A desire to realize additional sources of revenue or a new/improved business model – such as those possible through predictive and advanced analytics, business intelligence and reporting, quality compliance, and other possibilities. 


Systems thinking does not replace good software or systems architecture and engineering. In fact, it directly feeds into these disciplines by providing a stronger foundation to integrate and align stakeholder interests, technology, and leverage existing assets while helping to manage uncertainty, risk, priority and opportunity. The product of systems thinking provides for better requirements, which of course leads to better design, development and testing. Systems thinking is complementary in this way to systems architecture, engineering, and development methodologies as a means to provide overarching guidance and governance to manage essential innovation for these other disciplines. The rapidly changing healthcare ecosystem presents multiple challenges: demands for faster time to market of more complex systems and products, increased product differentiation, demonstrable value, and cost/revenue. It is harder than ever to compete solely on the richness of your feature/function sets. Healthcare continues to move to an outcomes based, cost conscious ecosystem with ever- increasing patient empowerment and greater payer influence, marked by the growing use and influence of emerging/disruptive technologies – cloud, mobile devices, big data, advanced analytics and others. 

The key for real, value based growth – and maybe for survival – is to embrace innovation. While continuous iterative development based on learning from your customers and the market may have served you well so far, the shift to a patient-centric and payer-savvy outcomes driven world will disrupt this business model. Ignore this at your peril, because the same forces you are facing now have rocked other industries before, with scores of mature companies unable to hold on despite their best efforts. Clayton Christensen, the noted author of The Innovator’s Dilemma and The Innovator’s Prescription, has shown that it is not ineptitude or obsolescence that cause great companies and products to fail. Failure results from being slow to react and to change rapidly enough to embrace new opportunities in the market in a way that addresses the disruptive impact of rapid changes in technology and the ecosystem. 

Avoid these failures by focusing your future development investment strategically on how you can innovatively create value in these changing times. Adopting a systems thinking approach will allow you to achieve value driven solutions with innovative “big step” changes to cost and capabilities beyond what your current products and development approaches are able to offer. 

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