Disruptive Innovation Comes to Health Care

November 7, 2012 Editor 0

For me and many other physicians, reading “Will Disruptive Innovations Cure Health Care” by Clayton Christensen, Richard Bohmer, and John Kenagy in the September-October 2000 issue of Harvard Business Review was like having a light turned on. We instantly understood that our heads had been in the sand, that we had not understood the real threats to our organizations’ viability — and that our strategies had to change.

The article describes how disruptive innovations have come to other industries, and would inevitably come to health care. Simpler, lower cost options for meeting patients’ simpler needs would get a foothold in a market, and then take more and more market share. Coronary angioplasty, for example, was at first used to open clogged coronary arteries in only the simplest cases. But over time it was applied in increasingly complex situations, making expensive bypass graft surgery less and less necessary. With advances in medical knowledge and technology, care that currently required an expert in a teaching hospital could be delivered in a community hospital… or a doctor’s office … or a walk-in clinic in a drug store … or the patient’s home.

Until we read this article, I think physician-leaders like me in academic hospitals focused on doing a good job for their patients, and battling for market share — patients, that is — with other academic hospitals. Community hospitals battled with other community hospitals. It was like World War I trench warfare, where a 1% shift in market share was a big deal. The status quo was pretty much the status quo.

Suddenly we understood that the real threat to the status quo was the movement of care to lower cost, more efficient, more convenient options. The 1% shifts in market share between similar competitors was of trivial importance compared to the possible 20% movement of business to providers who offered lower cost disruptive innovations.

Health care providers had to ponder whether they should fight the natural movement of care to lower cost options by, for example, raising fears about their safety. That seemed like a losing strategy to most of my colleagues. The other options were innovation and integration — working hard to come up with new and better ways of addressing patients’ needs, so there would be new reasons to come to “the experts,” and integrating those with lower cost approaches. That meant forming integrated delivery systems that could actually prosper if they moved care to the most efficient setting (physicians from the teaching hospitals in my organization, for example, now drive out to community hospitals and ambulatory facilities to deliver cancer, cardiac, infertility, and other specialty care). This innovation and integration is still a work in progress. But the imperative to pursue it became clear with that HBR article.
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Categories: HBR, Insights

Tags: community hospital, disruptive innovations, Health care