What’s driving transformation in healthcare today?

What’s happening in healthcare right now isn’t unprecedented. It just feels that way. The challenges are the same kind organizations have always faced, but the tools to solve them are new.

There’s a rich history of organizations that have been able to flex and modify based on the pressures and needs of their businesses. Take Corning. They’ve spent more than a century transforming their core expertise in glass to meet and drive demand. They shifted from glassware to glass, and then pioneered fiber optics in the 1970s, essentially creating a new market. When flatscreens arrived, they moved into LCD glass. Each of those shifts was a transformation, even if we didn’t call it that. 

Businesses are alive, and being flexible leads to longevity. Success means meeting your customer where their demand is. Healthcare organizations are currently grappling with the same issues they always have: how to continue serving the populations, individuals, and businesses that depend on them. Catalant’s survey of transformation consultants shows as much. AI integration and workforce adaptation emerged as the top priority in healthcare, with cost optimization and efficiency rounding out the top three. Addressing these problems requires what it always has—flexibility and a clear orientation toward what you’re trying to deliver. Doing this in healthcare presents unique challenges. 

What makes healthcare transformation unique?

To understand why a flexible orientation in healthcare is so hard to maintain, look at  the layers within the system, each complex on its own, and all in constant motion. Few industries come close to healthcare in structural scale and interdependency: large payors, pharma manufacturers, health systems, and device companies are bound by relationships where single decisions reverberate throughout. 

Moving transformation through systems requires sustaining momentum through gates of ideation, completion, and realization. At each stage, the right people need to understand if the project is actually moving the P&L. Clearing a gate operationally is not the same as realizing value unless the CFO can connect the initiative to financial results. Policy shifts can reprice or reprioritize assumptions mid-program, compounding the challenge at every stage. The organizational complexity is staggering, but it’s only part of the problem.

Consider how each patient brings a million environmental variables with them through the door: food access, housing, education, financial capabilities, sleep schedules, exercise or lack thereof, consumption of entertainment through mobile devices, relationship health, and more. 

It’s so overwhelming that Stephen Wolfram’s concept of computational irreducibility comes to mind. To paraphrase: some systems are so complex that they can’t be modeled, predicted, or abstracted faster than the system itself unfolds. Healthcare has long passed that threshold. 

By the time the clinical moment arrives, when the needle hits the arm, all the innovation, all the transformation, all the money in healthcare has already been spent. The needle piercing skin is zero, in a reductive sense. Considering everything that had to go right to get there, it’s a miracle it ever does.

Why transformations stall 

Having to navigate the labyrinthine healthcare system itself is enough of a reason why transformations stall. With only a few hiccups along the way, a lot can break downstream. 

Too many initiatives compete with insufficient financial justification for any of them. Without prioritization, focus fractures and returns dilute. Execution gaps arise when work stalls at functional boundaries and no one owns the handoff. While progress reports show the project on track, delivery slips. And even when initiatives ostensibly finish, the CFO often cannot connect the accomplishment to a financial result. These gaps in prioritization, execution, and realization are endemic to transformation programs across industries. 

What distinguishes healthcare is how difficult it is to close those gaps. Regulatory scrutiny is rising and adds complexity beyond normal market variability. M&A activity produces multi-layered organizations that are difficult to align even in stable conditions. Meanwhile, the business is expected to deliver on financial targets while simultaneously managing care quality, workforce challenges, and technology transformation. In conditions this complex, transformation leaders need to get the whole organization invested. 

The best leaders stay connected to the day-to-day. In healthcare, that connection is particularly important because the workforce is specialized and mission-driven. Credibility with them comes from understanding what the work actually involves.

The leadership factor

Transformation projects live and die not only by the tactical and technical skills, but by the emotional, persuasive connection leadership has with the people required to make change. This isn’t just instinct. Ninety-three percent of consultants in Catalant’s transformation research agreed that organizations underestimate the cultural aspects of transformation. 

A good transformation comes from a leader who has charisma and trust; one who builds a team capable of doing the work without making people dread it. I call it aura. (The kids who use that word are onto something). Leaders with aura can identify the right people, convince them to come along by their very nature, and create environments where sharing when something isn’t working is treated as a valuable contribution instead of a disappointment. 

People naturally gravitate toward what they already know, but the best transformations often come from outside the industry. A firm I worked with had a forecasting product with no connection to healthcare. Seeing potential in the market, they asked whether it could cross over. Their approach was disciplined: diagnosing what their product was capable of, mapping changes required, identifying leadership, committing investment and building in ripcord moments to abandon the project if it wasn’t working. In the end, they turned a product that wasn’t healthcare bound into one successfully driving revenue in a new market. It succeeded because they were open to the possibility that it could.

AI requires integration for it to be transformative

In this age where AI is growing so rapidly, here’s a thesis I live by: Saying no and staying still is a rebellion. Many AI products have been weeds, not flowers, built to capture market exuberance, but they’ve failed by using technology to search for a problem rather than the other way around. 

Be cautious of anything that leads with AI as its sole identity. In healthcare, we have products establishing business needs across payor, provider, pharma, devices, and digital health. The value of AI comes from integrating into those systems and changing outcomes that have already been identified as priorities. 

And that’s what leaders are doing today. They’re largely open to using AI from vendors they’re already doing business with. AI is delivering productivity gains in EMR and EHR documentation, revenue cycle automation, prior authorization, procurement, patient experiences, and inventory optimization. These are the flowers. They work because they’re integrated into workflows that already exist.

We’re also starting to see use cases that go beyond efficiency. I’ve seen AI applied to failed clinical trials to reconsider the research protocol, cohort selection, and the case for failed asset retrial in ways that weren’t feasible before. 

The harder problem is that most leaders—and most people—experience AI through an LLM interface, and that’s how they conceptualize AI. But AI’s real win isn’t the interface you interact with. It’s when AI tells you the next best action without being asked, in the place you need it: a pharmaceutical refill alert, a dietary change for someone with hypertension, a flag to insurers about variables pointing toward an inpatient visit for poorly managed disease—and more we haven’t conceived of yet. Arriving at a future destination means staying oriented toward the problem rather than chasing the technology.

What success looks like 

At a summit last year, a physician was asked what was success in healthcare. His answer stayed with me: There’s not an end goal. The point of healthcare is to carry on and to carry on well. Healthcare is parallel to the lifecycle of a human, and the goal of human life is to carry on the best it can in the moment it exists. 

That’s how to think about success in transformation, too. If it’s not making incremental improvements to care delivery, to safety, to quality, to molecular or pharmaceutical asset management, to device innovation, creation, deployment, patient experience — and it’s not better than a human can do it— then you’re not improving and growing. You’re on a treadmill, working too hard.

The two biggest risks I see are not trying and pretending something works when it doesn’t.

In practice, start by partnering with executives who have phased execution experience and know how to protect a business model without overwhelming the organization. Pilot rather than experiment in areas where safety and revenue aren’t at risk, and build in ripcord moments so you can stop a pilot when the data warrants it. 

Approach transformation with a sense of fallibility and curiosity to reach transformative value.  

Keep your aura.