Disruptive Innovation

This is based on an old post from The Physician Executive when I first started thinking about the place of disruptive innovation in health care delivery.


The problem with disruptive innovation in health care is thinking twice about how it applies.

A couple of precepts before we begin, just so we’re all on the same page, or at least the same library:
1) First the technology can exist for a long time before it is adopted, if at all. It is in the application that an innovation potentially becomes disruptive.
2) Adoption is likely to come from smaller players as new technologies are frequently overlooked by the big players.
3) The innovation is not disruptive to the consumer. It is disruptive to other producers. The consumer adopts it because it is simpler and cheaper than the alternative.

In my world, the innovation will come from changes in the way health care is delivered, not about a sexy new scanner or robotic procedure or even a new iPad app for diabetics. And here, observations about how slowly such innovations are taken up become pertinent.

I would argue against big business. Lately, consolidation has caused health care to be delivered out of monolithic medical systems incorporating primary care, specialty, allied health (physical therapy, audiology, optometry among others) and imaging services. This creates a few problems:

1. Like big government, big business generates an entrenched bureaucracy that is resistant to change, difficult to navigate and primarily interested in perpetuating itself.

2. Incentives are skewed to generate more testing and services. Primary care, when properly delivered, reduces downstream costs to the system, meaning less revenue for the organization.

3. There is less choice (see availability of reproductive services in areas dominated by large Catholic health systems) and the cost advantages of scale initially required to reap the benefits of the technology deployed are rarely manifest.

Carving primary care out of the health care delivery system and providing a special place for it with better revenue, greater legal protection (e.g. tort reform, voiding non-competes) and subsidizing an infrastructure to allow small, personal, relationship-based practices would be a tectonic shift on how we think about health care.  Now that would be disruptive; and just as the iPhone disrupted the PC market, it is only primary care that can disrupt the medical tech (specialty/referral/imaging) sector.

Maybe this is why Clayton Christensen believes health care is ripe for disruptive innovation, although the comments confirm to me that he has not yet found the right disruptions. It will be up to people like Dave Chase, Rob Lamberts and Brian Forrest to figure it out. I could include others, but why take sides?