How Academic Medical Centers Can Innovate During Tough Times

Academic medical centers (AMCs) are integral to the American healthcare delivery ecosystem. Their research-and-development mission places them at the center of medical innovation. Yet despite their importance to society, they aren’t immune to economic woes; more than 70% of all AMCs experienced their worst financial performance on record in 2022, and they face many challenges in the years ahead.

AMCs took center stage at the recent World Medical Innovation Forum in Boston. Convening hundreds of stakeholders ranging from large AMCs and biopharmaceutical firms to early-stage start-ups, this year’s event focused on innovation in three areas: central nervous system and brain health; oncology; and immunology and inflammation.

Oliver Wyman’s Adam Harpool was among the panelists looking at the future of AMCs in the context of innovation, financial performance, and operational challenges. The panelists explored a variety of themes in their wide-ranging discussion. Here are highlights from five of them.

AMCs are uniquely positioned to drive innovation

Given their role in translational medicine and technology transfer, AMCs can unleash innovation across the ecosystem, whether to tackle their internal challenges or address the increasingly complex care needs of an aging population. For example, AMCs soon will be able to leverage generative artificial intelligence tools such as ChatGPT both to reduce tedious administrative tasks such as discharge paperwork (helping to solve clinical burnout issues) and to stratify populations for the most appropriate targeted interventions (helping drive the most efficient and effective use of limited resources).

Increasing rigor around investments

At the same time, AMCs could face significant financial risks by innovating in domains where the market is either untested or already deeply saturated. Given the financial challenges many AMCs are facing, many CFOs and CIOs are increasing the level of rigor in evaluating business cases for innovative solutions, in some cases using a “stage gate” approval that requires demonstrated results before additional capital is released.

Opportunities and headwinds for digital therapeutics

There is growing interest in digital therapeutics at AMCs and beyond, with many new solutions entering the market. However, key challenges remain around reimbursement and proof of efficacy; the fate of Pear Therapeutics is a cautionary tale.

The key role of regulation in unlocking innovation

From the ongoing Access to Prescription Digital Therapeutics Act of 2023 to a potential federal role in regulating prices for biologics, regulators will continue to walk a delicate line between mainstreaming access to new therapies and care delivery models (such as the reimbursement changes that enabled the rise of telehealth during the pandemic) and avoiding innovation-stifling regulatory overreach.

The importance of equity and access

Finally, all panelists agreed on the importance of designing and deploying innovation to ensure equity and access. This requires intentionality across all stages of the innovation lifecycle for AMCs and other innovators, emphasizing addressing fundamental questions of access and social determinants of health in socioeconomically underprivileged communities (such as the fact that telehealth requires broadband Internet). Financial innovation will also play a role, such as in the use of subscription payment models between payers and pharmaceutical firms for costly novel therapies.

A full video of the session is available here.

To learn more contact Matthew Weinstock, Senior Editor, Health and Life Sciences.