The Reason and Consequences Behind Healthcare's Persistent Case of Pilotitis
Image created by Rudy Chidiac. © Open Medical 2024. All Rights Reserved
The healthcare industry is suffering from a chronic case of ‘pilotitis’.
Pilots are temporary, limited-scope implementations of healthtech products either unfunded, partially, or fully funded by the healthcare provider to assess effectiveness and feasibility.
However, healthcare has a habit of repeatedly launching pilots but rarely progressing them to full-scale implementations, hence the term ‘pilotitis’.
This raises three questions.
Why is the healthcare sector consistently initiating pilots?
Why do they seldom go further than the pilot stage?
And what are the consequences?
1. De-risking the decision-making process
Healthcare systems are, quite rightly, risk-averse.
Healthcare often relies on complex multi-stakeholder decision-making processes where everyone holds a veto. This decision-making approach fuels pilot projects as a risk mitigation strategy. This is true even for solutions that aren't new to the market. If the solution is new to the specific healthcare provider, the sense of unfamiliarity prompts the initiation of a pilot.
What healthcare providers often fail to realise is that while they perceive pilots as risk-free, they are merely shifting the risk onto the supplying company. This ultimately does not benefit any of the parties involved.
The risk aversion that drives the initiation of these pilots ends up creating a different kind of risk, one that is often overlooked.
2. The depreciated value of pilots
If you buy something at a very low cost or are given something for free, you'll treat it with a lot less value than if you invested a significant sum into it, even if the true value matches that investment.
It's the same with pilots. There will be little to no value attributed to it from either the healthcare organisation or the supplier, especially when it is an unfunded pilot. It’s the opposite of the sunk cost fallacy. When you make a significant investment in something that is not working, it encourages more investment in the hope of eventual success. Pilots do the very opposite: since they are given at either a reduced cost or for free, there is no commitment and they become undervalued.
Ultimately, the costs for these pilots, especially those that are not funded by the customer, will have to be recouped, either through building those costs into the business model, which increases costs to the market or through external funding.
So companies that are more market-driven and have the potential to offer significant value are unwilling to offer pilots since they have, by definition, demonstrated that their offering provides value in the market.
3. A vicious cycle
This continuous push for pilots without funding creates a system where there is pressure to support solutions with unproven business models that rely on external funding, while solutions that have proven themselves in the market still face upward cost pressure. This cost increase then affects scalability and adoption because the higher price makes it harder to make an initial purchasing decision.
The decision, therefore, appears riskier, leading to a vicious cycle where pilots become necessary but rarely progress beyond this stage.
This cycle hinders the ability for innovations to be scaled and provide value. And with the backdrop of an unfavourable demographic shift, rising costs, increasing demand, and workforce pressures, there is a risk associated with not doing anything—a risk that is often overlooked, which emphasises the need for innovations to be adopted and scaled.
Rethinking the role of pilots
There needs to be a shift in mindset where pilots are seen as valuable, approached with commitment and viewed as research. This way, pilots can provide a practical and hands-on approach to testing new ideas, systems, or strategies before implementing them on a larger scale, which is particularly true for unproven digital solutions that need proof of concept.
So rather than seeing pilots as a risk-free, low-commitment option, healthcare providers and suppliers need to view them as a critical part of the innovation process.
