It pays to have your wits about you when trying to find a loo at the sprawling Garfield Innovation Center on the outskirts of San Francisco.

The US$10 billion centre is dedicated to developing cutting-edge healthcare, and much of its spacious interior has been turned into a mock hospital. The "hospital" not only has a fake delivery suite, fake operating theatre, fake emergency room and fake patient wards - it even has fake bathrooms.

"Be sure not to use the bathrooms that say 'these are not real bathrooms'," a guide warns visitors.

The centre is owned by Kaiser Permanente, an American equivalent to Southern Cross in New Zealand. The organisation is a private not-for-profit insurer that manages the healthcare of more than 8 million people in California, and several other states.

The Garfield Center is used to test and tweak everything from rubberised hospital floors, to ergonomic design, to advanced healthcare technology such as telemedicine and robots.

In March, Kaiser Permanente was named the fifth most innovative healthcare company in the world by Fast Company magazine, and in the four years since its living laboratory was built, it has hosted more than 20,000 international visitors.

Last month a group of New Zealanders saw the centre for themselves. The group included nine veterans of the healthcare and IT industry here, who have each developed their own modern solutions to old-fashioned problems (see Pg 15).

The nine were selected from more than 100 contenders in a competition run by NZ Trade & Enterprise. The group was chosen by a panel of mostly American judges with impressive credentials, including leading venture capitalists, prominent health IT consultants and the Dean of Technology at Harvard Medical School. The reward was to be included in a fortnight-long "Focus On Health" roadshow across North America.

For all of them, the Garfield Center was a fascinating place to visit - and a chance to pitch to a very receptive audience.

No one knows exactly how much the United States spends on healthcare, but figures in excess of US$2 trillion are regularly tossed around. It is the biggest and fastest-growing healthcare market in the world.

Given New Zealand's proven expertise in healthcare technology, with companies such as F&P Healthcare and Orion Health, it is not surprising it is one of several sectors NZTE is focussing on in the US.

Both the Bush and Obama administrations have been convinced by arguments that technology will help to contain costs, as well as continuing to improve people's lives.

Despite their proximity to Silicon Valley, staff at the Garfield Center insist they are not blinded by the sheer sex appeal of much of the technology that is regularly brought to their attention by companies hoping for lucrative contracts.

The whole point of the centre is to find out what works and what's likely to be a waste of members' money, says senior technology analyst James Lewis.

Lewis is a doctor with more than 30 years' medical experience. These days he is part of Kaiser Permanente's innovation and advanced technology group and is certainly familiar with what is known as "Gartner's hype cycle". The cycle describes how disillusionment often follows over-optimism about the benefits of new technology.

What staff at the centre try to do is fine-tune a product or service so it increases productivity or quality of life, he explains.

"One of the things we really truly believe is that the best way to succeed is to fail, and to fail early, and to fail cheaply as much as possible. This is very poorly tolerated in healthcare if you are at a facility level, and you want to do something as a manager. If you fail at the first go-round, you may not get a second go-round. But it's really important that before we spend US$5 billion on an electronic system, that we have worked out a lot of the failings, and a lot of the bugs, and so forth."

While many of its innovations originate elsewhere, Kaiser Permanente encourages its staff to develop their own projects as well, providing grants of up to US$200,000. Last year 32 projects received funding out of 300 or so proposals.

"It's a bit like a venture fund - we have a 10-to-1 ratio of losers to winners, but we don't think of it like that because some might not necessarily fit our criteria, but they may have a home somewhere else in our organisation," says Lewis.

Other initiatives to encourage the cross-pollination of ideas include an in-house social network called The Idea Book; a group called The Innovation Hunters which includes regional representatives with a record of being able to marry good clinical ideas with good business ideas; and monthly technology demonstrations where even the cleaners are invited, so they can add their input.

It's a very American - and, many would say, very healthy - attitude: that every strike simply brings you closer to your next home run.

One recent strike was self-service drug-dispensing kiosks. The trial was abandoned after just two weeks because California regulations required a pharmacist to be nearby, which made them uneconomic. A current trial of robots which have been developed to roam hospital corridors and deliver up to 220kg of linen, food and other essentials to individual rooms has also yet to be declared a success.

The home runs include a programme known as "Wii-hab", which uses Nintendo Wii video games to help people with disabilities to exercise. It was found to be the only physical therapy that worked for a young girl with cerebral palsy, for example.

And there is plenty more where that idea came from.

In its mock hospital, the centre is currently testing clip-on microchips which can not only track staff, they can also track patients and alert staff when they have fallen down, spent too long asleep, or too long in the bathroom.

It is also experimenting with various types of mobile devices for both staff and patients, including a rugged iPad-type device that staff use instead of clipboards. And it is particularly interested in facial recognition technology which could allow staff to instantly log in and out of its computer system, after a time and motion study showed some staff were having to go through this process up to 75 times a day.

Nurses across the organisation have given the thumbs-up to a trial of online virtual training. Another experiment includes a complex hub developed by Intel that allows wireless biometric data collection, which could prove useful for monitoring patients in their own homes.

Out in the real world, remote monitoring services allowing, for example, hospital doctors to monitor a patient's heart rate while they are still in an ambulance, are already being used.

Lewis is also enthusiastic about the possibilities for self-service in healthcare. The aim, he explains, is to give staff more time to do the things machines cannot do - like giving personal service that is caring and empathetic, and helping people with more complex problems.

He finds it hard to believe anyone would reminisce about the "good old days" when a lack of technology meant long queues at the bank or the airline check-in counter.

"We are moving in that direction as well in terms of using kiosks, and using interactive digital signage, and using our website to allow patients to take care of a lot of the clerical-level functions."

It has been estimated that as few as 6 per cent of American GPs keep electronic health records (EHRs), but at Kaiser Permanente they are standard. And many of its members are already able to log into a portal known as My Health Manager, which allows them to arrange their own appointments, view summaries of their visits, look at their lab test results (sometimes before their doctor), and send secure emails which are guaranteed to receive a response within 48 hours.

It's the access to the lab data that surprises most people outside the organisation. Lewis admits it took "lots of cultural change" to get staff to accept it. "Very few exceptions of things are blocked, so it's been an interesting experiment."

As for the members themselves, most appear delighted with the service they get, according to independent surveys. Although a glowing article about Kaiser Permanente in a recent issue of the Economist prompted some to complain that journalists were falling for the organisation's own hype, Lewis insists its history as a co-operative strongly supported by labour unions ensures that it acts in everyone's best interests.

But he admits the American system as a whole is still plagued with problems.

"The things that we see going on around us in this country is a lot of redundancy, people working for this fee-for-service model, piecework, and inefficiency. Some people would even say it's chaotic. The US is making an effort to improve our lot, but we recognise that it's a system largely out of control."

Although the Obama reforms are really only insurance reforms at this point, they will at least require everyone to have insurance, he notes. Funding will also be linked to quality measures.

But the real question is how America is going to be able to continue to afford what it's already got. Lewis believes innovation is the only answer, and not just incremental innovation or even the occasional breakthrough. "What we're really trying to do is take this leap with disruptive innovation to take us to an entirely new level of quality service, and return on investment."

Alan Spinks, who is the national programme manager for the quality, improvement and innovation team within New Zealand's Ministry of Health, insists New Zealand is not too far behind the kind of developments showcased at the Garfield Center.

Many Kiwis probably don't realise it, but New Zealand is well-regarded internationally for its health management, he says; it's just that our trials tend to take place in the field. Around 97 per cent of our GPs already use EHRs, for example - the second-highest rate in the world.

Although there is still much work to be done here to integrate those records across facilities and regions, New Zealand is an ideal place to put such ideas into practice, says Spinks. This also gives New Zealand companies a leg-up in the States, because they can prove their concepts already work.

That, however, seems to be news to some of the entrepreneurs on the US roadshow, who express frustration with the previous lack of interest from ministry officials in some of their own innovations.

Spinks admits it's not just a cost issue, and he echoes Lewis' comments. "If we want to really transform healthcare we need to start treating changes as experiments, and learning from those experiments," he says. "New Zealand provides a really good platform to do that."

Claire Eeles is a former chief information officer for the Warehouse Group. These days she is NZTE's director of the West Americas, and is enthusiastic about the opportunities for New Zealand companies in the US healthcare sector.

Americans are finally waking up to the sorts of problems that many other countries have been grappling with for years, like rising costs and rising demand, she says. "A lot of the solutions we have are all about hospital efficiencies and new ways of leveraging technology to save costs and do things smarter, so they really play into the new demands that come out of the Obama healthcare reforms."

Our software solutions, for example, tend to be software-as-a-service models, with relatively quick payback. And because Kiwis tend to be generalists, that often leads to the type of lateral thinking that is not always evident in the US.

"The challenge will be that there are so many ideas. Healthcare is the flavour of the month in the US."

Nevertheless, her optimism is confirmed on the second night of the tour at a networking event on the top floor of San Francisco's swanky Clift Hotel.

The event is attended by Herb Schultz, responsible for overseeing federal health strategy for much of the southwestern United States. It is also attended by David Brailer, best known as the man appointed by George W. Bush in 2004 to be the country's first "health information czar".

One of Brailer's main duties was to develop a 10-year plan for the widespread adoption of EHRs. These days he runs a private equity fund called Health Evolution Partners, which aims to invest in "cost-effective, high-quality health care".

Brailer mentions he was recently visited by an Australian company hoping to do a deal. "I didn't know how to tell these people they didn't rank compared to these really great New Zealand companies - so we'll just keep that as our secret," he grins.

He also claims to be a "tremendous fan" of Orion Health. "I think what [CEO] Ian McCrae has done is an incredible thing. To see someone do that level of local work, but to become known around the world as one of the key health information integrators, here and in Japan, Europe, the Middle East - and even Australia - shows it can happen."

According to Brailer, the roadshow has indeed come to the right place at the right time. He points out that an extra 25-30 million people will receive healthcare in the US as a result of the Obama reforms. And given the "unfolding, slow-motion cost crisis" that is looming, the sector is crying out for creativity, he agrees.

One area that is likely to boom, he suggests, is technology that will allow people to maintain their health in their homes, now that US hospitals will be financially responsible for patients for 30 days after they are discharged. He also points to another feature of the reforms, which will allow patients to shop around for healthcare providers depending on their specific needs, and to manage their insurance in innovative ways.

The decision to give US consumers a high degree of control over their own care is one thing the US has got right, he argues.

"It's the consumer piece that's telling the rest of the world where you're going to be in the future and I think conquering this market will be critical to what you're trying to do."

Brailer stresses the big picture - the stunning fact that despite all the problems with the American system, life expectancy has doubled in less than a century.

"In some way, the American public and regulators and policy-makers and insurance execs and hospital execs get the grand equation, which is you put money in, you put in good ideas, and you turn the crank and you let it sit, and eventually out comes the most unique product that any industry produces in the world - which is longer lives."

Despite its ghastly fragmentation, the US health market, he stresses, is "very, very open to great ideas" right now.

Karyn Scherer travelled to the US as a guest of NZ Trade & Enterprise.