Creating 'Predictable Winners' in healthcare through best practice innovation
Pushed to the limit by gaps in funding and staffing, healthcare organisations are looking to digital tools and workflows – particularly involving AI applications – to shore up ailing services. While digital transformations often fail, Stuart Jackson and Ilya Trakhtenberg of L.E.K. Consulting explain how healthcare organisations can still beat the odds to successfully fire up an “innovation engine”.
Stuart Jackson is currently vice chair of L.E.K. Consulting, but he has been with it since it was just a single-team boutique. Now it is a global strategy brand with more than 2,000 consultants spread across the Americas, Asia Pacific and Europe. That journey has taught him and the firm many lessons in innovation and service development, which he believes could help today’s healthcare leaders.
Speaking to Healthcare Business International, he explains, “We began with a personal networking model similar to McKinsey and Bain, relying entirely on word of mouth rather than formal marketing. That has changed as organisations increasingly purchase [our services] based on expertise – they want to know what you understand about specific areas, such as heart disease and emerging technologies. Navigating the tension between what to preserve and what to relinquish, though it may sound trivial, is a crucial challenge organisations must address over decades.”
With healthcare innovation becoming an existential imperative, organisations must find ways to adapt that become systemic and embedded in their operations and culture. To help further explain this approach, Jackson has penned a book with Ilya Trakhtenberg – a managing director based in L.E.K.’s Chicago office – to detail how healthcare service providers can overcome daunting innovation odds, decide “what to relinquish” and “what to preserve”, to find a way to become “Predictable Winners” (which happens to be the book’s title).
This is particularly important at a time when healthcare providers are figuring out how to adopt new technologies into their operations. There are a huge array of opportunities for AI technologies to make an impact in healthcare, according to the L.E.K. Consulting professionals. One recent example in the press saw a West Yorkshire NHS Trust trial AI co-pilot software, in a bid to speed up diagnosis of conditions such as lung cancer and infections.
But getting the most from these technologies will be about more than simply rolling them out and hoping for the best. Deploying AI in this setting will encounter resistance from staff – in many cases, rightfully so. What is on the line is not just a balance sheet, where profitability may not increase, or cost-targets may be missed if AI tools turn out to be a bad fit for certain roles – lives are on the line.
Trakhtenberg notes, “If you have a new technology, let’s say a new AI technology that helps triage patients at the ER, you might run into the problem that you have actually [according to the AI] been admitting too many patients, and that’s the whole point [of such a system, to more accurately assess risk]… but then what do you do? Some of the doctors don’t feel comfortable saying, ‘Yeah, you can just go home. You probably don’t have a heart attack [having been assessed by the AI].”
For healthcare organisations planning product or service launches, understanding potential obstacles like this before they arise is of paramount importance – because while they might be healthy in smaller doses, they can build into a pervasive fear of anything new at all. Trakhtenberg believes that failing to account for this has left the healthcare sector out of step with the wider economy, and unable to apply innovations from other lines of work.
“For a lot of organisations, what they don’t spend enough time thinking about as they prepare to bring something to market is a deep enough understanding of the barriers to adoption and what issues they should expect once the product is in market,” he explains. “There’s often an excuse in healthcare of ‘we’re too regulated, it’s too complicated, things don’t work the same way.’ And there’s a lot of truth to it, but the willingness to actually ask questions and try new things and challenge existing models could be better. While there are innovators who are doing this successfully, I would encourage people to think: ‘What can we learn and how can we apply these lessons?’”
European healthcare innovation
According to Trakhtenberg, the level of regulation seen in European healthcare is much higher than in the US system. As a result, this means that “almost all” medtech innovation is coming from the US, while “very few [cases] are in Europe”. However, there are structural advantages in the European model – either single-payer or state provided – which are not present in the US’ hyper-corporatised health system.
“One of the things that we struggle with in healthcare innovation in the US is a crazy, complicated reimbursement structure,” he comments. “In a lot of European health systems it is an integrated payer-provider for most of it. It’s a public system that actually enables in many ways a system for innovating technologies that have long-term benefits but short-term costs.”
According to Jackson, however, there are ways Europe’s systems could evolve that could strengthen this innovation pipeline. In some healthcare systems, he argues that their structures or size can suppress or drown out innovation, due in part to a lack of “competition”. To that end, Jackson suggests competition across European regions in securing patients and reimbursement might alter things.
Jackson says, “Is there competition for patients, or does every system [in Europe] have effectively a monopoly on their local area? When you have a lack of competition for patients and effectively a single provider within a region or city, then that stifles innovation because there is less need to try to change and adapt. If another part of the country is doing it better, you’re not forced to try to catch up because you’ve still got your patients and you still have your system.”
One way in which the L.E.K. professional believes Europe could better emulate the US system, is by inviting private equity investors into healthcare. Arguing that “if you introduce more market forces, you will have more innovation, period”, Trakhtenberg adds that from his perspective, “the reality is that they push the envelope on the definition of what’s possible in the rollups of providers and aggregating them, finding ways to reduce costs and drive profitability.”
Jackson emphasises, “In order for innovation to flourish you need liquidity, and you need people to make money, very simply. You need people to have exits and liquidity because that’s what creates an innovation ecosystem. When you have innovators that create new businesses, exit those, get paid out, what happens is they will recycle that wealth into other new ventures. That’s how innovation ecosystems get created, but you need liquidity and wealth creation in order for that to happen, and private equity can be an important part of supporting both.”
Private equity in healthcare
The extent to which having an endless river of innovation – when studies such as a 2025 West Health–Gallup paper suggest more than half of the US population (a percentage which may soon rise) cannot afford to access quality healthcare – is really the key to improving patient outcomes is open to interpretation.
At the same time, the ways in which private equity can be seen re-defining “what’s possible” in the US health system might give European states pause for thought, when it comes to opening up their health systems to investors. A recent bipartisan senate investigation in the US saw Republicans and Democrats explore how private equity firms prioritise profits over patients, suggesting that this jeopardised care and eroded hospitals' financial health. In particular, the report highlighted the behaviour of Leonard Green & Partners (LGP), in its ownership of Prospect Medical Holdings (PMH).
In that case, PMH paid out in dividends and preferred stock redemption during LGP’s majority ownership – in addition to over $13 million in fees – that left PMH in severe financial distress. In order to pay out these distributions, PMH was forced to take on hundreds of millions of dollars in debt, eventually leading to PMH running out of cash and defaulting on its loans. During LGP’s majority ownership, several PMH hospitals suffered from the effects of labor cuts, decreased patient capacity, inadequate and unsafe building maintenance, and financial distress.
