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them. Currently, a few such arrangements are outlined such as incentives for
pay-for-performance methods of reimbursement. However, this remains an area
where healthcare organizations can be innovative and develop and implement
new arrangements that bring in value to everybody including the consumer.
What are the implications of the above value-driven healthcare framework for
individual healthcare organizations? A common theme that runs across the above
four cornerstones of value-driven health care is the need for transparency. As
such, perhaps the most critical task for health organizations intending to pursue
value-driven health care will be to develop strategies and practices that increase
transparency at all levels, particularly by deploying and using appropriate types
of HIT.
It is from such a perspective that IT-enabled consumer-driven service innovation
assumes importance in health care. To better understand this, first let us examine the
concept of service innovation in more detail.
8.3 Service Innovation in Health Care
The term “service innovation” is a relatively new entrant in management. Much
of the focus of both management practitioners and researchers so far has been on
product innovation. However, over the past 10 years or so, the proportion of the
service sector in the global economy has increased significantly to a state where
now the service sector dominates over the manufacturing sector.
The concept of service innovation includes innovation in service products (the
development of new or improved service products); innovation in service processes
(new or improved ways of designing and producing services); and innovation in
service firms (new or improved business models). Given that many of the most suc-
cessful companies in the contemporary world are service companies - for example,
Google, Amazon, e-Bay, Walt-Disney, etc. - it is not surprising that the concept
of and the practices associated with service innovation have started to attract con-
siderable attention in the management research community (e.g., Bitner, Ostrom,
& Morgan, 2008; Möller, Rajala, & Westerlund, 2008; Windrum & García-Goñi,
2008).
With the change in global economy and the emergence of technology-based
service companies such as Amazon and e-Bay, it has become quite critical that com-
panies develop business practices that promote both innovative service outcome as
well as innovative processes of service delivery, and most importantly, focus on
creating meaningful and valuable experiences for customers as part of the service
(Prahalad & Ramaswamy, 2004).
Service innovation calls for the adoption of innovative models and practices
that are beneficial to both the company and its customers and as such a need
for company-customer (or client-provider) collaboration to co-create long-term
meaningful relationships and bonds that will result in better quality goods and ser-
vices (Bitner et al., 2008; Moller et al., 2008). This is more so in the case of a
service-oriented industry such as healthcare.
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