www.kalypso.com

2011 Healthcare Reform and Innovation Survey

2

Agenda

•  Introduction to Kalypso –  The Kalypso Difference

–  The Innovation Engine

–  Software Expertise

•  About the Study

•  Detailed Results –  Market Issues

–  Capabilities

–  Gaps & Barriers

•  Getting Started

1/16/12 2

3

•  Introduction to Kalypso –  The Kalypso Difference

–  The Innovation Engine

•  About the Study

•  Detailed Results –  Market Issues

–  Capabilities

–  Gaps & Barriers

•  Getting Started

1/16/12 3

4

The Kalypso Difference

Kalypso is a consulting firm focused exclusively on innovation. Our people are leading business professionals who combine experience in select industries with product and process innovation expertise.

1/16/12

5

The Innovation Engine Our services are designed to help companies become more innovative and provide a systemic view of new product & service development.

Business  &  Innova-on  Strategy  

PLM  Technology  

Leadership  &  Learning  

Intellectual  Property  Management  

Front  End  Of  Innova.on  

Por0olio  &  Pipeline  Management  

New  Product  Development  Execu.on  

Pricing  &  Value  Management  

1/16/12

6

•  Introduction to Kalypso –  The Kalypso Difference

–  The Innovation Engine

•  About the Study

•  Detailed Results –  Market Issues

–  Capabilities

–  Gaps & Barriers

•  Getting Started

1/16/12 6

7

About the Study

Innovation in Healthcare In February – May 2011 we conducted a survey of market issues driving the need to innovate and how healthcare companies are planning to address these market changes and opportunities.

1/16/12

Current Capabilities

Gaps & Barriers

Future Capabilities

Market Issue Drivers

Company Operations

Need to Innovate

Capability Maturity Framework

8

About the Study

1/16/12

Company Type Organization Role

Members Revenue Geography

16%

52%

32%

Provider / Other Payor

Did not respond

n= 31

32%

20% 16%

32%

Single-state

Regional

National

Did not respond

n= 31

16%

39% 6%

39%

<1MM

1-20MM

>20MM

Did not respond

n= 31

19%

36% 13%

32%

<$ 1 BN

$1-10 BN

> $10 BN

Did not respond

n= 31

19%

19%

13%

49%

Director

Prod Mgmt

Executive

Did not respond

n= 31

39%

16%

45%

Prod Dev

Prod Dev Support

Did not respond

n= 31

U.S. Companies We surveyed 31 individuals in 23 different healthcare organizations.

9

•  Introduction to Kalypso –  The Kalypso Difference

–  The Innovation Engine

•  About the Study

•  Detailed Results –  Market Issues

–  Capabilities

–  Gaps & Barriers

•  Getting Started

1/16/12 9

10

Benchmarking Market Issues

Top Concerns for Product Development:

1/16/12 Source: Kalypso Healthcare Survey Data 05.11.11

Market Issues

0% 10% 20% 30% 40% 50% 60%

Medical Health Records

Role / impact of essential community care providers in commercial

Sharply Tiered Network Designs

High Deductible Health Plans v 2.0

Benefit Carve Outs / Exclusions

Increased Demand for Customization

Aging Population

Health and Wellness

Change in Reimbursement Methodology

Mandated Medicare Reduction in Spend

Changing Channel Strategies

ASO / ASC - increased demand for and/or complexity of relationships

Alternative Care Delivery Models

Transparency to Cost and Quality

Accountable Care Organizations

Retail Exchanges

There was general agreement that two issues (Retail Exchanges and ACOs) were of major concern, after which agreement fell off significantly. See Health Care Reform Magazine for a more in depth discussion on the top issues.

11

Current State vs. Future State

Benchmarking Capability Maturity Companies believe they do not yet have formal product development capabilities in place; however, they plan to have “advanced” product development capabilities in the near future. This is typical of other industries, where the experience is that making this change is often a 5 to 10 year effort and expectations often outpace ability to change.

1/16/12

Six Elements of Product Development

0.91

1.36

1.29

1.15

1.35

1.41

0 1 2 3 4 5 (Developing) (Basic) (Formal) (Advanced) (World Class)

Avg. Current State Avg. Future State

Source: Kalypso Healthcare Survey Data 05.11.11

Technology

Resource Management

Process Management

Products

Innovation

Strategy Current State

Future State

12

Benchmarking Gaps & Barriers

1/16/12

Leadership = Directors, VPs, Senior Executives Product Managers & Staff = Product management

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

Resource Availability

Technology - Core Systems

Leadership Strategic Alignment

Innovation Culture

Organization Alignment

Resource Capability

Technology - General

All Responses

Product Managers & Staff

Leadership

Source: Kalypso Healthcare Survey Data 05.11.11

Gaps & Barriers by Level

There are significant differences of opinion between leadership and staff on what the major issues will be in achieving targeted capability improvements Agreeing to where to focus, and overcoming these barriers will be a major factor in achieving planned improvements to meet the emerging competitive threats in the industry

13

•  Introduction to Kalypso –  The Kalypso Difference

–  The Innovation Engine

•  About the Study

•  Detailed Results –  Market Issues

–  Capabilities

–  Gaps & Barriers

•  Getting Started

1/16/12 13

14

Innovation Transformation Framework

Kalypso uses an integrated approach to improve our clients’ ability to innovate

Finance/ ERP

Human Resources

Supply Chain/ ERP

Sales/ CRM

Innovation Strategy

Product Lifecycle Management

People, Leadership & Culture

Front End Of Innovation Development Commercialization

Portfolio & Pipeline Management

1/16/12

15

Innovation Mgmt. Implementation Approach

Phase III Roll-out Institutionalize

Phase II Detail Design & Piloting

Detailed Process Design

Training Materials

•  Prioritize for “to be” framework •  Validate high level design elements •  Initiate “Quick Hit” implementation

•  Design integrated cycle time process •  Pilot on projects •  Construct Training Plan & Materials

•  Begin roll-out •  Continuous Improvement Plan

(Measure, Monitor, Improve)

Organization Roll-out

Steering Committee Review

Project Team Formed Champions for Change

Design Workshops

IT Systems Design and Rollout

“Quick Hit” Implementation

End-to-End Process Piloting & Refinement

Pipeline Rationalization

Solution Architecture Design

Innovation Engine Diagnostic

Stakeholder Alignment

Design Workshop

Our Innovation Management implementation approach is designed to be scalable and adapt to our clients’ unique situations

Phase I Assess

Steering Committee Review

Impl

emen

tati

on A

ppro

ach

1/16/12

16

Innovation Engine Diagnostic

Step 2: Complete Innovation

Benchmarking

Step 1: Evaluate Current Product

Planning Processes & Innovation Strategies

Step 3: Identify Innovation Gaps / Opportunities

Step 4: Design Future State

Process

Step 5: Develop

Transformation Roadmap

Detailed understanding of the current innovation and product planning process

Gather specific data to understand current practices against industry benchmarks

ID gaps in current processes relative to best practices. Develop value prop. for change

Determine practices and organizational changes needed

Blueprint for transformation. Detail “Quick Hit” Opportunities

• Refine project objectives • Mobilize project team

• Hold Kick-off meeting

• Schedule interviews, workshops, & updates

• Gather and review relevant process documentation

• Collect and analyze existing metrics

• Examine s/w tools in use • Review as-is for 1-2 recent projects

• Conduct interviews • Compile interview responses & compare to Maturity Model

• Assess existing metrics against industry database

• Identify barriers to collaboration (internal and with key partners)

• Identify organizational constraints

• Analyze benchmarking and interview data

• Compare to best practices and ID gaps and opportunities for improvement

• Prioritize gaps and improvement opportunities

• Identify key business and performance drivers

• Compile findings from previous work to compile holistic view of planning / NPI process

• Leverage relevant best practices

• Design future state process architecture

• Determine proposed org. design required to support process architecture

• Map path from current state to desired future state

• Align with implement-ation timeline

• Develop change program

• Goals

• Communications

• Project Plan • As-is Process Map • Initial Quick Hit list

• Interview summaries • Summarized Planning/NPI Objectives

• NPI Maturity Scorecard

• Process gap analysis • Detailed Findings & Recommendations

• Executive Summary with Prioritized Recommendations

• High-level process architecture

• Organizational design

• Transformation Roadmap

• Quick-Hit Plans • Final Report

Objectives

Deliverables

Key Activities

Our Innovation Diagnostic Sets The Stage For Redesigning And Transforming Your Capabilities

1/16/12

17

Develop Advanced Scenario Planning and Optimize Strategy

Create Pipeline Visibility Through Iterative Portfolio Design and Test •  Leading practice design is tailored to client specific requirements •  Design is tested immediately with real data for validation •  Value of analysis is confirmed through executive presentation

Portfolio Data

Analysis

Facilitated Portfolio Review

Portfolio Design

Executive Objectives

Organizational Requirements

Validate Governance, Teams and Sustaining Processes

Product Portfolio Management

Kalypso uses a rapid prototyping approach to design, implement, sustain and optimize Portfolio & Pipeline Management.

1/16/12

• Scenario planning is enabled and drives proactive resource allocation •  Innovation strategy, roadmaps and internal capabilities are tightly integrated with portfolio decision making to optimize investments

•  Pilot implementation of processes, teams and tools guide improvements and roadmap phasing

•  Decision making becomes part of the way work gets done

Portfolio Working & Decision Teams

Portfolio Calendar Portfolio Process &

Off-Cycle Process

Portfolio Phase-Gate Integration

18

Resource Pools

What do we need to deliver innovation portfolio objectives?

Project Definition

Do we all mean the same thing when we say “project?”

The innovation portfolio management base design includes all components needed to gain pipeline visibility to enable decision making.

Portfolio Design Elements

1/16/12

Project Reporting Data How do we slice, dice and aggregate portfolio information?

Project Basic Information How do we identify projects?

Evaluation Criteria How should we value one project against another?

Portfolio Scope When and how does a project enter and

exit the innovation portfolio? Strategic Buckets

How do we classify innovation projects to monitor investment?

Inclusion Criteria

Is this project big enough to spend time doing portfolio analysis on?

Project-Level Data

19

Kalypso Contact

1/16/12

415-­‐378.3274  

Andrew  Nygard  Senior  Manager  andrew.nygard@kalypso.com  

hPp://kalypso.com/company/people/andrew-­‐nygard/