The Multi-layer Barriers to Innovations in Healthcare

Innovation in healthcare is not merely a desirable outcome; it is an imperative for addressing the escalating demands of an aging global population, the rising prevalence of chronic diseases, and the constant need for more efficient, equitable, and patient-centered care. While the potential of groundbreaking treatments, diagnostics, and digital health solutions is immense, the healthcare sector often resists the very innovations that could transform it. This resistance stems from a confluence of deeply entrenched systemic, cultural, and financial barriers. Drawing upon insights from my research, I will delve into these barriers and outline a few pathways to dismantle them, fostering an environment where innovation can flourish. There are five key obstacles. There are, however, several barriers to Innovation.

First, the regulatory complexity. The regulatory landscape in healthcare is one of the most significant impediments to innovation. While regulations are essential for patient safety and ethical considerations, they often protract approval processes. The justifiable high-risk environment of healthcare, where errors can have direct and severe human consequences, fosters a culture of risk aversion. This translates into rigorous regulatory scrutiny often leading to "regulatory overload," that may consume significant financial and human resources that could otherwise be directed towards improved patient care. The prolonged timelines for obtaining regulatory approvals for new drugs, devices, and digital solutions deter investors and small innovative companies, for whom time-to-market is critical. The concern over transparency, explainability, and malpractice liability for new technologies further complicates the regulatory process.

Second, there are cost and funding barriers, as implementing innovative medical technologies and treatments can be prohibitively expensive, limiting access to healthcare institutions. Developing novel medical technologies, drugs, and digital platforms requires substantial investment in research, clinical trials, and regulatory navigation. While my research has explored pricing models for new-to-the-world products like integrating electronic health records and illustrating the willingness of consumers to pay for utility-adding features, the initial capital outlay for innovators can be immense.

Many healthcare institutions, particularly those with limited budgets, struggle to adopt and integrate these expensive innovations, limiting their widespread impact. Startups, often the source of disruptive innovation, face significant hurdles in securing adequate funding due to the long development cycles and high upfront costs inherent in healthcare. The economic pressures on healthcare systems often prioritize immediate cost-saving measures over long-term investments in innovative, potentially disruptive, technologies.

Third, there is a lack of data sharing, and the fragmented data systems lack a seamless data exchange among providers, applications, and devices. This siloing of information prevents a holistic view of patient data and limits the potential for data-driven insights and innovation. This fragmented nature of healthcare data systems is a critical barrier to harnessing the full potential of innovation, particularly in the age of big data and artificial intelligence. Patient information is often siloed across different providers, platforms of electronic health record, laboratories, and imaging centers, making a holistic view of a patient challenging to achieve. As suggested by insights from my work on digital health and AI governance, secure and seamless data exchange is crucial for clinical decision-making and for the responsible deployment of AI-driven applications. Without interoperability of data systems, the development of data-driven insights and personalized medicine is inhibited. Furthermore, the inability to easily share data across care settings also impedes care coordination, population health management, and the development of integrated digital health solutions. Security and privacy concerns, particularly regarding sensitive patient information and compliance with regulations like HIPAA, further complicate data sharing.

Fourth, traditional fee-for-service reimbursement models often reward individual acts of care rather than integrated delivery systems or value-based outcomes, failing to incentivize the adoption of innovative solutions that can improve quality and efficiency. The current reimbursement models often fail to incentivize innovation that delivers long-term value and improved patient outcomes. Traditional fee-for-service models, which reward the volume of services provided, often discourage the adoption of preventive care, remote monitoring, or other innovative solutions that may reduce the need for expensive interventions down the road. This misalignment discourages providers from investing in technologies that might improve efficiency or long-term health if those improvements do not translate into immediate, increased revenue. There's a need to embrace both the funding of innovation and the integration of cost-effective models into national strategies, moving beyond a focus on high-cost interventions.

Fifth, there is cultural resistance. Healthcare organizations often exhibit resistance to change, with established practices and hierarchies hindering the adoption of new ideas. Beyond the technical and regulatory challenges, a pervasive cultural resistance to change within healthcare organizations poses a significant hurdle to innovation. Research on fostering a culture of innovation in healthcare settings emphasizes that this resistance is not due to a lack of talent but rather stems from deeply rooted structural, cultural, and systemic factors. Healthcare professionals operate in high-pressure environments, where efficiency and timely care are paramount. While desired, new digital or AI-driven tools may be perceived as disrupting existing routines, requiring additional training and time investment, and adding to the cognitive load, leading to avoidance rather than embrace. At the individual level, the fear of failure, potential impact on patient safety, and inherent risk aversion can stifle experimentation and the adoption of novel approaches. Established hierarchies and traditional practices can also create an environment where new ideas are not implemented.  Figure 1 presents the multi-layer barriers to healthcare Innovation.

Figure 1. The Multi-layer Barriers

To foster a more innovative healthcare ecosystem, I urge executives to encourage early engagement between innovators and regulatory agencies to better understand needs and expectations. This proactive engagement can help innovators understand regulatory requirements and identify potential roadblocks, while regulators gain insights into emerging technologies. A better understanding may expedite approval processes. Also, strategic alliances between healthcare institutions, investors, and technology companies may facilitate the pooling of resources and mitigating financial risks. Further, prioritizing the development and adoption of standardized data exchange protocols (e.g., FHIR) can enable seamless and secure information flow across systems. Prioritizing the development and widespread adoption of standardized data exchange protocols, such as Fast Healthcare Interoperability Resources (FHIR), is crucial. These standards enable different systems to "speak the same language," facilitating secure and efficient data exchange. Investing in robust cybersecurity measures and transparent data governance policies is essential to build trust and ensure patient privacy. Implementing robust data governance policies and leveraging cloud platforms can facilitate data sharing while ensuring patient privacy. Last but not least, shifting towards value-based care models that reward quality outcomes, patient engagement, and efficient care delivery, can incentivize the adoption of innovations that demonstrate cost-effectiveness and improved patient health.

To promote a culture that values learning and continuous improvement, I call executives to involve providers and patients in the design and implementation process of new solutions to ensure user-centricity and build trust. Executives may also encourage entrepreneurship within the organizations. Transforming the organizational culture in healthcare organizations requires a conscious and sustained effort.

Leadership must champion innovation and cultivate a culture that embraces experimentation, tolerates calculated risks, and views failures as learning opportunities. My research suggests that strengthening the internal locus of control and personal innovativeness of providers and other health professionals through targeted organizational support and professional development, can significantly enhance innovative behaviors. Involving clinicians, patients, and administrators in the co-design of new solutions from the earliest stages ensures that innovations address real-world problems. Promoting entrepreneurship within existing organizations can empower employees to develop and implement new ideas, fostering a bottom-up approach to innovation.

To sum, while challenges remain in standardizing outcome measurement and financial sustainability for value-based care, it holds immense promise for driving a more innovative and patient-centric healthcare system. Removing barriers to innovation in healthcare demands a concerted effort from all stakeholders: governments, regulatory bodies, healthcare providers, technology developers, investors, and patients. By addressing regulatory complexities, fostering innovative funding mechanisms, prioritizing data interoperability, cultivating a culture of innovation, and reforming reimbursement policies, we can unlock the transformative potential of healthcare innovation. My research underscores the multifaceted nature of these challenges and the importance of a holistic, collaborative approach to build a more responsive, efficient, and ultimately healthier future.

Additional Readings

• Gabay G, Ornoy H, Gere A, Moskowitz H. Personalizing Communication of Clinicians with Chronically Ill Elders in Digital Encounters—A Patient-Centered View. InHealthcare 2024 Feb 8 (Vol. 12, No. 4, p. 434). MDPI.

• Gabay G, Gere A, Zemel G, Moskowitz H. A Novel Strategy for Understanding What Patients Value Most in Informed Consent Before Surgery. InHealthcare 2025 Feb 28 (Vol. 13, No. 5, p. 534).

• Gabay G, Moskowitz HR. “Are We There Yet?” Mind-Genomics and Data-Driven Personalized Health Plans. The Cross-Disciplinary Perspectives of Management: Challenges and Opportunities. 2019 Nov 29:7-28.

• Rabino S, Gabay G, Moskowitz D, Moskowitz HR. Assessing pricing for a new product concept: PDA+ electronic health records+ real-time monitoring. Journal of Direct, Data and Digital Marketing Practice. 2010 Jul 1;12:27-51.