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Friday
Dec312010

Where Will Disruptive Health Care Innovation Come From?

Healthcare is a system that's primed for disruptive innovation.

Can We Build a "Faster Horse"?

Henry Ford is qouted as saying, "If I listened to the people, I would have built a faster horse". Ford's Model T was the disruptive innovation that changed transportation. Clayton Christensen's description of disruptive innovation is that a technology comes along that has the potential to change an industry, often because it's cheaper, more convenient, or more satisfying to the consumer. Early automobiles didn't disrupt the status quo because they weren't a better alternative to horses. But when Henry Ford's business model of mass production to produce an affordable vehicle for the average American worker, the internal combustion engine had found it's place in a disruptive innovation.  

Now think about health care. The status quo is expensive, and often inconvenient for consumers and patients.  The financial incentives of our payment system encourage physicians to produce more services to cover the costs of keeping their doors open, and generating their salaries. Both independent practices and hospital-owned physician groups generally follow the same formulas for financial success.

Most doctors I've talked with do not believe they can be "a faster horse". Most consumers/patients don't want to spend a half-day or more in the doctor's office - away from work, home, or family - for health problems that might not require it. Many patients find the current health care system paternalistic and difficult to navigate with satisfaction. Shortages of primary care physicians are widespread, yet the solutions being discussed call for training more PCPs. Shouldn't we be thinking like innovators, and looking at changes in health care through consumers' eyes?

Maybe our mobile devices (cell phones, Iphones, Blackberrys, IPads, etc) can be the technology that leads to a new business model of both primary and chronic care that allows consumers to have a cheaper, more convenient, and more satisfying experience in getting health information and health care services. If payment reform comes in the package of bundled or global payment for health outomes, I can imagine a system where face-to-face encounters with a physician will be needed only for acutely ill patients, or periodic visits for chronically ill patients. The physician may be leading or supervising a team of health care professionals who provide health and illness information through wireless devices, video screens, remote monitoring technology, and convenient locations (often open 24/7). 

Under a new payment system, the hospital will be the most expensive and often most dangerous place in the health care system. I don't know about you, but I'm like the typical consumer in economist Michael Grossman's Theory of the Demand for Health: I want "health and healthy days" on earth - not time spent in the doctor's office or hospital. I'll devote my time, money, and energy doing things that will keep me healthy, and away from the health care system.

When insurers are purchasing medical groups, and new players to health care like Cerberus Capital Management are acquiring hospitals in the Boston area, you can bet that the opportunity for disruptive innovation in health care is coming.

Reader Comments (2)

Thanks, Barry. What you are suggesting is already occurring.
Examples include:
mobile health (http://www.mobilehealthwatch.com), regional telehealth networks (http://www.cotelehealth.com), medical travel and tourism (http://www.medvoy.com) , and global quality and cost transparency networks (http://www.civhc.org) all leading to the hospital and office , as you suggest, as the helathcare distribution location of last resort. The healthcare 4P's have changed before our eyes. The change is as disruptive as eCommerce was to bricks and mortar retail. It's up to leaders, like the readers of this site, to drive adoption and penetration of these higher value models.
Happy New Year.

Barry,
Nicely written. Disruption is occurring already with bundled payments and the new form of capitation called ACO's. The winners here will be those systems that have nurtured physician leaders who can:
Influence proactive strategies
Generate enthusiasm and optimism in their colleagues
Empower others to break the chains of victimhood so ubiquitous in our profession.
Happy New Year

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