Health Systems Innovation – What is it?

Updated: Aug 18, 2020

Healthcare is at once the most personal of human experiences and the largest and most complex industry on the planet; one whose considerations span all the way from the molecular to the scale of humanity – it affects and is affected by all aspects of society and economy from the food we eat, to the materials we make, to how we design our built environment. Health systems cross the divide from science to management incorporating the study of medicine and diseases, epidemiology and the management of public health. 

Throughout history, the health equation has evolved with societal changes. Over the course of centuries, our understanding of health has evolved from the spiritual realm to being grounded in the realm of scientific materialism. Out of our newly found knowledge of the physical world–that the scientific revolution brought–and the new institutional paradigm of the industrial age, we built the modern health systems we inherit today. 

Over the course of the 20th century a standardized model for health systems solidified. With the institutional framework of the nation-state, a set of centralized formal institutions coalesced as a standardized solution for managing the health of populations around the world. Under the guidance of government bureaucracies, diseases were cured and even eradicated as advances in science and the incentive structures of the market drove incredible progressions in medicine and medical technologies. National health care plans developed to pay for health care with some countries even achieving universal health care. 

Contemporary Context

But by the turn of the 21st century, our industrialized health systems are facing a new and complex set of challenges. Internally their heavy dependence upon a reductionist centralized approach in design has resulted in fractured and highly complicated systems, that are becoming overbearingly costly to operate while failing to deliver the outcomes society desires. Externally the world is changing in profound ways. 

Today the whole health equation is changing as a function of massive upheavals in the way people live. The so-called epidemiological transition is occurring as people move from a predominantly natural environment – where natural communicable diseases were the primary issue – to human-designed environments where the primary health concerns are non-communicable diseases created by human behavior and the design of the built environments we live in. This new set of health issues coupled with the changing demographics of an aging population in many countries is shifting the primary burden on health systems into the area of chronic diseases that are much more complex in their nature, requiring prolonged care and consideration of multiple environmental and behavioral factors. 

At the same time that emerging economies are trying to rapidly build out their health systems, globalization is increasingly working to interconnect us along a multiplicity of dimensions with the resulting health threat of pandemics on a global scale. A new global health ecosystem is emerging as a consequence of the growing interdependence of the world; due to shared issues and opportunities, health issues like climate change, antibiotic resistance, health inequalities, and others. However, while the interconnectivity has increased and the number of actors has greatly increased the organizational structure of this global health system remains hugely dislocated in terms of coordination with many discontinuities. Both internal and external to individual health care organizations the same issues of fracturing can be identified. As a consequence, the health systems challenge of today is different from that of the past, it is no longer about medicines, procedures and efficiencies, it is primarily one of organization, both internal and across whole health systems.

New Approaches

The health systems of today are a classic illustration of both the achievements and limitations of reductionist thinking. The analytical approach has made many advancements over the modern era, but with the ever-evolving complexity of today’s health systems linear models that focus on component parts are blinding us to the real systems-level considerations that are needed to move forward.

We focus on parts getting ever more analytical, hoping that the cure to aging or obesity is down there somewhere, in some gene or molecule and with the best of intentions we pursue that dream with billions of dollars, whilst being blinded to the networks of horizontal connections and overall environment within which human health exists. We invest billions in high-tech medical solutions and specialized doctors to use them when the solution to the patients’ problem may have just required the doctor to listen a little bit more closely; but unfortunately they were part of a system that incentivized them to do anything but that.

The emergent unintended consequences of the analytical approach are everywhere to be seen; health systems are populated with people with good intentions that lead to undesired outcomes because of the structure of the system and the structures of incentives that are acting on agents in the system. Massive amounts of resources, intelligence, hard work, and aspirations go into the development and maintenance of today’s health systems while society often describes them as being “broken.”

The reductionist centralized approach only ever scales so far before starting to grind to a halt in the face of the complexity that it is not able to harness. A distributed model to health systems can go beyond that to harness that complexity, to tap into the full resources in the system. The challenge for us today is not to do things faster, more efficiently and larger than we did them before, it is to think and operate differently, to embrace the complexity of a distributed network model to health systems, to build integrated systems.

Integrated Approach

Rather than dividing a complex problem into its component parts, the systems perspective appreciates the holistic and composite characteristics of a problem and evaluates the problem in the context of its environment. The systems perspective is grounded in the assertion that the forest cannot be explained by studying the trees individually.

All relevant factors need to be considered when dealing with people’s health. Health is not a thing for the health system but an ongoing process within society that pervades all activities. In the past, we have made progress by focusing on individual diseases and programs to combat them, in the future, we need to be looking at the whole context that creates health. 

Real solutions have to embrace the complexities inherent in the human condition and this means looking at health systems as open systems, not limited to the formal institutions but instead embedded within the everyday lives of people; looking at both the formal health system and the informal networks that constitute people’s everyday life to create integration between them.

Whereas the reductionist approach results in a centralized and hierarchical rule-bound health system that spawns more specialized domains and departments as it scales, an integrative, systems thinking approach flips this around, positing the idea that large-scale complex systems can be the product of the interaction between simple rules that result in emergence. There have been many past attempts to design a complex set of rules to govern healthcare when these have not created the desired results, our instincts have been to create even more rules, the end result is the evolution of a convoluted system as a product of an overly complicated set of rules and regulations.

Complexity science asserts that these assumptions lead us in the wrong direction. The emphasis shifts from rules that specify formal health system procedures and processes to creating the context for the emergence of a healthy population. A shift from a rule-bound system where all situations are specified, to a situation of defining simple rules and guidelines; the answer is to create the conditions for interaction, self-organization, and emergence. 

On the macro-level, of the whole health system, when we adopt a language of systems thinking and start to see health systems as complex adaptive systems our approach inevitably changes from one of specifying future outcomes and directing linear incremental processes of change, to instead looking at the conditions for emergence and processes of evolution, thinking like a farmer who creates the conditions for their crops rather than an engineer that pre-specifies all details and outcomes.

Value-Based Care

Around the world healthcare systems are facing mounting challenges and growing costs. The staggering projection for the growth of cost in the US healthcare system are the clearest example of this, but not an exception. Demand is going up dramatically as people get older, as chronic diseases are on the increase and as the emerging economies try to build out their health systems to reach the majority of their population. Going forward the health finance equation is no longer really adding up – we have to drastically improve the value that health systems are delivering at lower costs and incremental improvements within the existing model are not going to be sufficed to realize the required changes.

Unfortunately, the current system is designed to do anything but maximize end-user outcomes and actual value delivered. In healthcare, we have ended up organizing around tools, processes, silos and various management metrics; everything but the individual. The issue is that the existing centralized systems are built around a “push model”. By focusing on the formal institutions of healthcare provisioning this has resulted in a system that is organized around internal processes, tools, technologies, drugs, all of its component parts, with limited interest in actual end-user outcomes and limited capacity to accurately measure them; unfortunately with our existing system, a huge amount of resources are being wasted due to misalignment of incentives – reorganizing incentives is a critical issue. 

The value-based approach helps to shift the mentality from lack of resources to the alignment of incentives. Value-based care requires a restructuring of the basic locus of the organization so that it pivots around the individual, to achieve this it is required to create new metrics that incentivize actors in the system to focus on those outcomes and align the organization around them.

Because end value is typically not about any one service, it is about the whole set of services, we have to shift the metric from individual products and services to whole compositions of services that are required to deal with a patient’s needs. The metrics of payment and success have to shift to the whole process, when we focus on the parts and apply our metric of success to them we can get negative synergies, which means the whole process is of less value than the sum of its parts.

User-Generated Systems

During the Industrial Age, we developed a specific form of healthcare model designed for the mass society of that time. This is when the whole patient as the object of medical practice actually begins to move out of the frame of reference almost entirely; rather than seeing the patient as a whole person the medical professions started breaking the patient up into smaller and smaller components, first large body parts, then organs, tissues, cells, molecules, etc. The locus within the system shifted to a specialized analytical knowledge that is only available via formal institutions as health care started to pivot around centralized organizations pushing out solutions to end users. 

The centralized model may have worked in the past but today it is becoming overwhelmed; straining under the weight of its own fragmentation while being presented with a set of health challenges that are more complex and less amenable to this approach.

The challenge today is to actually push the capacities of the system outside the formal organization into the hands of people – pushing capabilities out to the edges of the network, to where and when people need them, to create individuals that are informed, engaged, supported, that are able to create and strengthen informal health systems themselves.

From a systems thinking perspective, it is often best to facilitate an environment where local people and communities self-organize to improve health, leading to positive results that health planners might not have even imagined. Also, because health challenges are complex, and solutions differ depending on time and place, we cannot successfully impose a top-down plan of action and consistently achieve predictable, positive results. Instead, it is often best to facilitate environments where local individuals, agencies, and communities self-organize to improve health, this is particularly the case with the global health system. 

To respond effectively to the current challenges the next generation health system needs to be a distributed system, one that enables user-engagement within informal networks; provides people with the information and tools to understand and manage their own health; that works with information based feedback loops to align incentives towards the emergence of the desired health outcomes and in so doing removes a massive section of the load currently placed on centralized health care.

Health Networks

The factors that affect health conditions today are multidimensional, complex and dispersed, as a consequence, they require an approach to health that is likewise distributed. Instead of always thinking of a centralized system as the solution we need to shift our mentality to think distributed systems first; moving from a centralized model by default to a decentralized peer-to-peer model, looking at health and health systems as networks of interacting elements. 

The current model for the design of health systems is vertical in nature. The national health systems of today are organized around geographic localities, with each geography providing the same set of basic services while huge transaction costs between a multiplicity of centralized systems render current health systems inert, fractured and costly. 

The vertical approach results in duplication of services, huge redundancies, lack of interoperability that creates border frictions and excessive costs. In a world of low connectivity, it makes sense that each organization build and operate its own solutions because it is costly to connect into another system. In a world of high connectivity having each organization recreating the wheel within its boundaries makes little sense and we start to get high levels of redundancy and waste through duplication.

A value-based approach requires collaboration across all actors to achieve the desired outcome. It requires that we actually organize around connections rather than vertical domains and departments; that we build healthcare systems as service networks, where the primary aim is open standards and common protocols for enabling interoperability.

The increase in connectivity brought about by information technology will inevitably turn the vertical organizations of today into networked organizations, this creates huge opportunities to rethink the basic structure of health systems. As a consequence, the challenge in this world of networks is no longer one of how to build a better drug or how to pay for more medical staff but it turns to one of organization – interoperability, modularity, interfaces and how to integrate different systems. Given the current state of our industrial healthcare systems, this alone could achieve major improvements in outcomes for end users. 

Process Oriented

The current health system of today is episodic, health considerations occur occasionally and at irregular intervals. We are assessed by our doctors at periodic physical examinations and we are treated by our doctors when symptoms of ill-health become evident. In the periods in between, health goes largely ignored; as we often engage in behavior that is deleterious to our health. Health systems are not just fractured by departments and geography they are also fractured over time – individuals appear on the health system radar when they are sick and then disappear again. Without effective integration between the formal and informal health system, there is huge discontinuity over time making the formal health system reactive instead of adaptive and preemptive.

In a pre-information technology world where we could only see specific events we could only be reactive, but today we can increasingly start to move to a model that is proactive. When we have a 360-degree view and pervasive information we can start to see processes instead of snapshots and the challenge becomes one of designing health services and systems that are process oriented instead of just based around specific disconnected events. 


Not only do we need new ways of thinking about health and new approaches to managing health systems, but more than this we need to realize these new approaches through technology. In the coming decades’ powerful new information technologies are set to reshape virtually every aspect of society and economy, how can we use these technologies as a medium to realize new ideas and approaches, to build health systems that are qualitatively better in outcomes than the ones we inherit? 

Information technology now offers the technical means to truly redesign health systems along virtually every dimension, as once again medicine continues its progression from pre-modern herbs and leeches to modern pharmaceuticals and antibiotics, to the blockchain analytics healthcare revolution that is happening today.

Blockchain networks will be a key part of the technology infrastructure enabling this next generation health system. Blockchain networks provide a secure and shared computing infrastructure that does not belong to any one centralized organization, but an open network where data is tamper-proof, trustworthy and visible to all as required.

This shared computing infrastructure can form the substrate for distributed health platforms, where no one organization stands in the center but instead a diversity of autonomous actors are able to collaborate within a trusted shared data environment. Blockchains are peer-to-peer networks that enable people to hold and maintain their own health records within their own data wallet so that their data no longer resides within the fractured set of data silos of many different organizations. 

Likewise data analytics will be a second key technology enabling the health platforms of tomorrow. Given advances in computing capacity and new forms of algorithms, we are now able to use big data structures to be able to do analytics on whole environments, not just of individual phenomenon. This holds out the possibility of moving us from a world of isolated snapshots, reacting to ill health based upon generic one size fits all models and procedures to a world where health care is pervasive and predictive and thus can be preemptive, preventive and personalized. Big data advanced analytics is a powerful new tool at our disposal but the question is how can we apply it in a holistic fashion to realize systems level innovation.

Hundreds of new blockchain health platforms and health analytics companies are being built that will surface in the coming years. These solutions will create new forms of decentralized marketplaces that will empower patients to become health and wealth producers instead of health consumers; the focus will shift to the end-user and the networks that combine health services to meet their needs in a personalized and preemptive way through unimaginable new uses of data and analytics.


This video explores how we can use systems thinking and new technologies to reimagine and redesign health systems in an age of information. To move beyond our traditional analytical reductionist thinking to health systems; to talk about networks that cross boundaries and whole systems; to move from a world of fractured centralized systems to open platforms; shifting the locus from closed organizations to ones that are centered around the individual; from arguing about the cost of service delivery to aligning incentives towards real value and outcomes; from static organizations to dynamic health networks; from reactive to preemptive; from a focus on the specific parts of the formal health system to the whole context within which health is maintained and realized by individuals.


Systems Innovation

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