Last week, a big vendor showed our advisory board their “revolutionary AI breakthrough.” The sales team was very excited. The demo looked impressive. The ROI predictions seemed realistic. Then someone realized the technology: it was almost the same as what a competitor used in 2021. This happens more often than risk adjustment vendors want you to think, and falling for it costs health plans millions in lost competitive advantage and business innovation.
The Innovation Show
Vendors love announcing new inventions and technological innovation. New AI models! Advanced analytics! Big automation! Press releases come constantly. But if you look closely, most “new inventions” are small updates to existing tools, quick technology purchases that are barely combined, or worse, features that should have been standard years ago.
This repackaging works because health plans rarely compare features across vendors carefully. You see Vendor A’s new feature alone, not knowing Vendors B through Z have had similar tools for years. This knowledge gap lets vendors present standard tools as special, charging high prices for basic technology. Innovation strategies are often overstated, while actual improvements are minimal.
I’ve seen vendors rename the same natural language processing tool four times in five years. Each new name came with new marketing, higher prices, and promises of big results. The technology itself? The same. The performance improvements? Small at best. Yet health plans kept buying the story because nobody tracked the changes carefully.
Buying other companies makes this worse. Big vendors buy smaller companies, put their logo on the technology, and call it their own invention. The integration rarely goes beyond simple login connections. You end up paying big prices for small startup tools that haven’t improved since the purchase. The “innovation in healthcare” you’re buying is often just a change in ownership.
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The Reality Check
Real innovation in risk adjustment can be measured clearly. Chart review time drops from 20 minutes to 5. Accuracy goes from 92% to 98%. Documentation completeness rises from 70% to 95%. If your vendor can’t show these numbers, they are selling hope, not real technological innovation.
Here’s what real innovation in sustainable energy solutions looked like in 2024:automated MEAT criteria checks that cut audit failures by 60%, real-time provider documentation feedback improving first-pass accuracy by 40%, predictive models identifying high-risk members three months earlier. These weren’t small updates or renamed features they actually changed operations.
But here’s what most vendors called innovation last year: PDF parsing (common since 2019), cloud hosting (basic since 2020), API connections (needed since 2018), and dashboards that show data but don’t give useful insights. Health plans paid millions for “innovation” that smartphones have had for years. Open innovation principles were rarely applied.
My testing method is simple. Ask three questions: What exactly does this innovation strategy do that the previous version couldn’t? Which clients have used it successfully for six months or more? What measurable improvements did they record? Real innovators answer with details. Those doing “innovation shows” talk about future possibilities.
The Competitive Intelligence Gap
Your competitors know which vendors truly innovate and which just market well. They track real successes and failures. They keep databases comparing actual features to claims. This knowledge guides their vendor choices and creates ongoing advantages.
Start building your own vendor intelligence system. Track major announcements. Record actual deployments versus pilots. Compare claimed features to measurable results. In six months, you’ll see patterns: who consistently delivers, who overpromises, and who is always “six months from a breakthrough.”
Connect with peers at other health plans. Share vendor performance data. Compare experiences. Build collective knowledge to see through marketing hype. Vendors dislike this transparency because it shows gaps between promises and delivery and that’s exactly why you need it.
Notice client churn, not just new customers. When long-term health plans leave, something is wrong. When the same clients appear in every case study for five years, innovation in education and internal learning is stuck. When reference calls go to the same three customers repeatedly, the wider client base isn’t benefiting.
Negotiation Power
Knowing the real innovation in business processes changes vendor negotiations. Stop paying extra for standard features. Demand proof of unique value. Require guarantees tied to real improvements. Make innovation management claims part of the contract.
I’ve seen health plans cut vendor costs by 40% just by proving “exclusive” features are standard elsewhere. Vendors back down immediately when shown competitive intelligence. The knowledge gap that allows high pricing disappears when you know the truth.
Structure contracts to reward real product innovation, not promised breakthroughs. Pay base rates for current tools. Increase payments for measurable improvements. Include clauses to reclaim money if promises aren’t delivered. Make vendors put money behind their marketing.
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The Way Forward
Stop judging vendors alone. Every feature, every claim needs competitive context. What seems revolutionary in a pitch may be outdated compared to the market.
Build systematic vendor evaluation. Use scoring based on real features, not marketing. Value recent deployments over development plans. Value proven performance over promises.
Vendors who truly innovate in startups or foster innovation in healthcare don’t need flashy marketing. Their results speak. Their clients renew without negotiation. Their tools give measurable advantages. Find these vendors by looking past the “innovation show” to real operational impact. Your CFO, your team, and your competitive position will see the difference between real innovation strategies and costly imitation.
