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Is disruption of mainstream healthcare the answer to our crisis?

December 13, 2011

I’ve been a fan of Clayton Christensen’s work.  The idea of disruptive innovations really resonates with me and provides a powerful framework for understanding how innovations are adopted (or not) by various businesses.  As I think about our healthcare dilemma (escalating costs, misuse of limited resources, shrinking access to care and, in general, creating a drain on our country’s economic health and competitiveness in a precarious global fiscal environment), I think about the construct of disruptive innovation quite a bit.

There has been a lot of hand-wringing and discussion about how to fix this problem.  There is even a new series of buzzwords entering our lexicon (ACO, patient-centered medical home, bundled payments, shared savings, bending the cost curve – this is an incomplete list).  This last one amuses me – bending the cost curve.  Try as we might, those of us in organized healthcare can’t come up with ways to really cut costs.  We proudly talk about strategies that may keep costs from going up as quickly.  The goal of keeping medical inflation at the same rate as general inflation is often mentioned.  The trouble is, we’re starting out spending so much more than any of our developed world comparators. Yet, can we claim that the quality of care we deliver is as good as other nations that spend considerably less?  So is ‘bending’ the cost curve really enough?

One reason we have so much trouble is that so much of our costs are tied up in labor (56% according to one recent study).  As someone recently quipped, “in healthcare, a dollar saved is a dollar of someone’s wages lost” – or at least 56 cents of wage lost. Also, as classically described by Christensen in The Innovators Dilemma, most of our decisions are made either by physicians or in consultation with physicians. So many times over the years, I’ve witnessed interesting ideas brought forth and dismissed out of hand by physician leaders. “Our patients would never go for that….”or ”That would not work clinically,” etc.  Of course clinical judgment plays an important role in healthcare delivery and the perspective that a physician brings is valuable.  But when we’re talking about efforts to really manage costs, we have a conflict of interest. Can decision-making physicians really look objectively at solutions that are presented which might result in less demand for our services and may affect our income? After all, we’re only human.

Last week, I was privileged to be on a plenary panel at the 3d annual mHealth Summit in Washington. My predecessor on the panel is the President of Apollo Hospitals in India. He gave an impassioned speech (effective too, laced with humor and using his booming voice and stage presence) declaring that mHealth would go nowhere unless doctors were compelled to adopt it.

Our Center stands on the border between two very different worlds.

In one world, our healthcare delivery system is facing the hurdles alluded to above. Partners, the delivery system we work for does its best to move 7000 physicians and a large hospital system to a new reimbursement model and, consequently, a new care model.  It’s going slowly, but we’re viewed as leaders and we’ve done amazing things to try to get us there.

In our industry, there is more talk than ever about the potential of connected health, but not too much implementation just yet. In fact, the predominant strategy floating around involves hiring more staffing for better care coordination and improved quality.  Wait, didn’t I say that 56% of costs are labor?  So we’re adding more labor?

In the other world our Center lives in, consumers are moving to take charge of their own health, adopting connected health as either a personal fitness aid, or as part of an employee benefit offering (e.g., the work that Healthrageous is doing).  This too is in its early stages, but as I watch it unfold, I’m struck by the possibility that the health care cost crisis may be solved by innovation that occurs outside of the traditional healthcare delivery system.

One example that is interesting is retail clinics. They are flourishing now.  They are taking business away from our primary care physicians. No one notices because they are all so busy, but as retail clinics grow, at some point we’ll notice.  Another trend to follow is how Walmart re-invents primary care.  It’s early and speculative, but I’ll bet a week’s pay that this model will include some component of home monitoring and surely lots of opportunity for patient/consumer self-care.

At our Connected Health Symposium last month, we held a lunch for several companies who are ‘non-traditional’ entrants into connected health. We had participation from a beverage company, a consumer products company, and a large retailer to name a few.  Why are they all interested in connected health?  I’m just learning, but I’m sure if they smell a business opportunity it is unlikely to involve mainstream healthcare.

So keep an eye peeled for something to happen.  Some routine service that you think you must see your doctor for will be delivered online or in some much more convenient way.  God knows, today’s mainstream healthcare delivery is about as consumer unfriendly as you can get. So once something that competes and is convenient, a true sea change should be upon us.

What do you think? Can you conceive some truly disruptive concepts that will take business away from mainstream healthcare delivery and still deliver quality care?

49 Comments leave one →
  1. mmaglothin permalink
    December 13, 2011 4:21 pm

    Great article and comment: “I’m struck by the possibility that the health care cost crisis may be solved by innovation that occurs outside of the traditional healthcare delivery system”

    I invite the readers to join a group on LinkedIn that Joe and I participate in:
    “Innovators Prescription for Healthcare Transformation”

  2. December 13, 2011 4:39 pm

    I thought Christensen’s most original insight was that the hospital is really three businesses under one roof…
    1) High-cost, high value diagnostic services than NEED to by paid by Fee-for-Service since that is the most effective way to allocate sufficient, scarce resources to the care of the patient. (Think: Dr. House, MD)
    2) Value-added processes, like total joint replacements, that have a 99.9% success rate. These should get paid by OUTCOME – with a money-back guarantee in the event of a re-hospitalization, infection or revision surgery.
    3) Chronic conditions, like arthritis or diabetes, that require networks of caregivers, from spouses to coaches to doctors. This should be paid for through a subscription, almost like a gym membership (without all the huffing and puffing).

    Christensen’s take-away was that Fee-for-Service (everyone’s favorite scapegoat for America’s runaway high-cost non-system) is good for something.

    Tim Richardson, PT

    • December 13, 2011 5:06 pm

      Very helpful. I was really using disruptive innovation as a concept at the highest level (the idea that the innovation may arise outside of the traditional seat of power). These comments, however, are quite useful.

  3. December 13, 2011 6:06 pm

    Great post! As a physician who has both created and then implemented original mobile health innovations within my medical practice, I live in both worlds. I agree with you that there is alot of talk and minimal action. I think the answer is as simple as dream it then do it…and may the best solution for patients (and subsequently cost savings) win.

    • December 13, 2011 9:27 pm

      Thanks, Jen, for commenting. You are right. You live it every day.

  4. Martin Cox permalink
    December 13, 2011 7:37 pm

    First of all excellent post. However, I would like to take us off subject to start; by asking (and answering in my view) a different question. What are we trying to achieve by Healthcare change? In my opinion it is to have a higher quality of life. The US is down on list of countries around the mid twenties early thirties (depending upon the metrics used) so not bad but not great. Is the aim to be number 1 in quality of life?

    If so we now know where we are going, healthcare is just one of those metrics that measure quality of life and one where the US scores quite low compared to its healthcare spend.

    If we improve healthcare do we increase the quality of life for the “individual”? I would hazard an answer that would be yes we would. I understand we have disease and chronic illnesses that are going to be unavoidable. However many are not. Will disruptive innovations help? Most certainly. mHealth is just one are where we can help. By utilizing technology to help manage our health. It is my view that each individual is responsible for their own health, not their physician, not their care team but themselves. If we can utilize mHealth (and other technologies) to help and educate by disrupting how we view our healthcare today, well we are onto something. If we squander the technological innovations and do not educate the public then all the technology in the world will not help. Our costs will continue to increase, our health will continue to decrease. Healthcare faces other industries that are at cross paths (food for example (sugar), tobacco, and others) so ‘fixing’ healthcare is a start not the end. To truly disrupt healthcare using innovation, we need to add to it education. Manage those with chronic disease, avoid poor health and naturally costs will decrease. Technology (and yes I work in technology) is not the only portion to the answer, but disruptive innovations…… yes by using connected health, monitoring, and putting the onus on the individual (you could use a carrot/stick approach as some are suggesting around higher insurance payments for those who do not exercise, have a poor diet, smoke etc etc) then costs will naturally fall. Quality of life. Our choice as a nation. I hope we choose to improve, and I see mHealth as part of the that disruptor that will help us achieve that.

  5. December 13, 2011 9:27 pm

    powerful stuff!

  6. December 13, 2011 9:50 pm

    Joe, you’re right, and I’ll go you one better – for some time I’ve felt that as good as Prescription is, it really missed the point: it talks about innovating within a broken model. Real disruption basically involves disregarding the establishment and helping buyers get what they want, bypassing constraints imposed by the dominant players.

    This is too big a topic for a blog comment so I’ll just touch on a couple of points:

    — After Innovator’s Dilemma [1997], in a 2002 paper “Disruption, disintegration and the dissipation of differentiability” he talked about how sometimes it’s more advantageous to bundle components into a highly optimized integrated system, and other times it’s more advantageous to dis-integrate, with common interfaces, so buyers can mix-and-match.

    The advantage in each case was that at different times, one approach or the other made it easier for consumers to get what they want. The essential thing that so many people don’t notice in healthcare is that although we keep inventing sexier and grander treatments within the establishment, those developments are not sourced by asking the public what they’d like more of.

    — I experienced disruption first-hand. My career was in graphic arts, and until the 1980s it was in typesetting machines. We kept doing our best to make better and better machines, suiting our most profitable customers, just as described in Dilemma. And just as in that book (which was still 10+ years in the future), when desktop publishing started disrupting us, we snorted at that toy crap, which ignored the professionals and went straight to the ignorant consumer.

    Well, it turns out it was a lot more expensive to go to a professional than to do it yourself. And although the DIY stuff was idiotically inept at first, it got a great big market quickly, so there was more potential for a winning vendor who could make a good product. And that cost-justified adding features that consumers wanted.

    Having seen that movie first-hand, I have a pretty clear picture of where this one will be going. Look at the cost curve vs consumer wages – costs are completely out of whack with consumer satisfaction.

    So yes, ” the health care cost crisis may be solved by innovation that occurs outside of the traditional healthcare delivery system.” Because just as inside the typesetting industry, the people whose perspective got us into this situation are truly unable to imagine what the consumers really want.

    Fortunately there’s an escape clause: give up our belief about what WE think is important or mandatory, just forget about it, and find out what consumers consider important. Invest in that.

    More on another day – I don’t want to violate the “internet law” that a comment shouldn’t be longer than the post itself.:)

  7. December 13, 2011 9:57 pm

    thanks Dave. I appreciate your wisdom here.

    • December 14, 2011 5:34 pm

      Great post by Joe and comment by e-Patient Dave. My personal bias is to give consumers better tools to understand their health, whether through crowd-sourced forums like Cure Together or through personal devices like FitBit and Basis. Over time I see these trends merging, I call the final collective product a Tricorder but whatever the name, it represents a tool for the Eric Topol’s “high definition man.”

  8. December 14, 2011 2:41 am


    Great post (and comments) – and great timing. 2012 is the year this issue will come into full focus – and not just because it’s on the docket with SCOTUS. To your exact point – there has been – and will continue to be lot’s of “hand wringing” over how to dramatically influence cost. Fact is – I think we know the mechanics of what needs to happen – it’s the politics that haven’t played out. I think 2012 could well be that year.

    By mechanics – I mean things we’ve talked about endlessly – but lack the political will to execute. Here are 3 that are often debated – and would each “bend the curve” – dramatically:

    1) Prescription drug prices are the highest in the U.S. – by a *wide* margin (some say as much as 60%). Why? The largest single buyer – the Federal Government – is unwilling to exert pricing pressure on the large industry known as pharma. NB: 2 of the largest DOJ settlements this year were Google ($500M) and Merck ($970M) – for issues around prescription drugs. I wrote about the Google settlement on The Health Care Blog here:
    2) There are politics (and huge revenue) around the whole CPT coding system – which is at the very heart of healthcare billing (and FFS). We handsomely reward expensive procedures while low-cost, preventative measures are rationed or ignored. There are more MRI machines in Pittsburgh – than Canada. The lowest price model from GE – a cool $1M. Doctors who own their own scanning equipment are 4 times more likely to order a scan – than those who don’t.
    3) There are 100M Americans that are either in poverty ($22,350 family of 4) – or just above (up to $34,000 family of 4) [ ] – yet we insist on our DNA birthright to run healthcare insurance as (primarily) for-profit. On it’s current trajectory – the annual cost of family healthcare insurance will equal the annual household income – by 2025. Medical expenses are a leading cause of bankruptcies in the U.S. (over 60%) and the U.S. stands alone with that one metric. Over 75% of those with a medically related bankruptcy had health insurance. [ ]

    PPACA is designed to address some of this (ACO models, more insured, no pre-existing exclusions and EHR adoption so we can measure “meaningful use”) – but big chunks of the existing infrastructure will still be intact. To your point – are we really being all that disruptive – or just hoping to minimize the damage? Vinod Khosla says it best when he says “… we really need to stop innovating around the edges.” PPACA might have been the best we could get – under those circumstances – but we need to stop kidding ourselves that it’s all that disruptive. Compared to other parts of the world [ ] is it really the best we can do?

    Dave was being gracious above (with his reference to the comment needing to be shorter than the post itself), but we really need this debate. I sincerely hope that 2012 is that year. The alternative is that we claw our way up from #37 on the World Health Organization ranking of healthcare systems. Today we’re one full notch ahead of #38 – Slovenia. [ ]

  9. December 14, 2011 8:54 pm

    I like your perspective. thanks!

  10. Civis Isus permalink
    December 15, 2011 8:40 am

    luv U ePD, but do NOT get how you arrive at this re: Innovator’s Prescription: “it talks about innovating within a broken model”

    Hmmm….It talks about innovating with in the Innovators Dilemma model. This reader did not find Christensen, Grossman, Hwang displayed any particular allegiance to the ‘broken model’. Quite the contrary, to judge from the dismayed looks of most clinical/health plan exec types I’ve sat next to during any of Dr Hwang’s presentations!

    Joe, I’m curious if any would-be CO-OP founders have approached you/Healthrageous about partnerships?

    • December 15, 2011 9:01 pm

      I just responded to a similar comment on Joe’s syndicated post over at HealthcareITNews ( I’m not sure where this perception comes from, other than the fact that Clay and I do spend time talking with stakeholders both inside the broken medical/care-based model as well as with those outside of it. The disruptive innovation model offers important insights to parties in either situation, so we will continue to try to educate everyone. Of course, history tells us that the real disruptive ideas will come from outside — hence, the looks of dismay whenever I’m invited to speak to an organization that finds itself already too far ensconced in the current structure of health care.

      • December 15, 2011 9:03 pm

        thanks so much for taking the time to clarify, both on this blog and the HIT news site.

    • December 15, 2011 9:05 pm

      no connections yet between CO OPs and Healthrageous

  11. December 17, 2011 2:26 am

    mHealth, Health 4.0 and reverse innovation is the clue
    None will reach a critical mass of users unless Medical Doctors become trained and aware of its safety use and quality requirements inside of the medical faculty training.
    Telemedicine is required as a troncal subject in medical training.

  12. December 18, 2011 9:26 am

    Doctors will have a role, but maybe not for all of healthcare and maybe not with such a top-down presence. I agree education is critical.

  13. Jim Taylor permalink
    December 20, 2011 2:22 pm

    For years, we’ve been reading how healthcare simply needs to adopt ideas from other industries such as financial transaction exchanges to ‘simplify’ the industry. It now appears the ACO/PCMH ‘models’ may be the vehicles of change similar to Amazon in retail. So, we finally have the convergence of new business models, technology and consumerism needed to drive real change. Finally!

    • December 20, 2011 5:15 pm

      I hope so. We still have a ways to go, however, in that many PCMH proponents feel that the way to solve the problem is by adding staff, not by using technology to spread providers over more patients at once.

  14. December 20, 2011 2:50 pm

    I love both the post and the thoughtful string. I think the difference I see is that there are (at least) two approaches. One is to nibble around the edges and make modest adjustments in deliverables and expectations. The other seeks to change the whole of the system. I think we need to be clear on which we seek.

    Disruption causes others to be disinterested in what you are doing. That goes against nearly every proven and successful business. Where there will be sustainable achievement in changing the system will only occur from outside of that system.

    • December 20, 2011 5:14 pm

      I think we’re too far gone from a cost perspective to nibble around the edges. Thanks for your kind words and thoughtful ideas.

  15. December 20, 2011 3:03 pm

    Primary care physicians have priced themselves out of primary care (albeit thru managed care systems) and retail clinics have rapidly filled in the space: Walmart (and likely Walgreen’s) will take that to a new level.

    Something else that will fill in that space is the QS movement, which fits more clearly into Christensen’s model than innovation within healthcare (even retail healthcare). Although it’s easy to look down upon as disorganized and anecdotal, I think it’s smart, well-connected to device businesses, and if they’re lucky, device business communities of users. One or more could end up looking like a new, more useful WebMD.

    Finally, as employers are the real customers of managed care organizations, there are those who understand and want to understand how to create a culture of health, and those that are just looking to get by.

    Some of the former are already integrating their wellness programs, disease management and biometric testing assessments into a single, cohesive offerings that reduce medical claims and costs and aim for measurable, outcomes-driven prevention and wellness designs. That seems like the right track to me.

  16. December 20, 2011 3:11 pm

    It’s interesting how healthcare has proven so resistant to disruption. A few years ago it seemed like Google or Microsoft was going to change everything, but now I’m glad I didn’t bet my career on that.

  17. Roger Provencher permalink
    December 20, 2011 3:52 pm

    I am a bit concerned about some of the “solutions” to the healthcare cost and healthcare quality dilemma. For instance, mail-order prescriptions, and clinics that offer discount pricing for some of the routine medical procedures such as tonsilectomy and appendectomy, etc. The mail-order prescriptions make it difficult to explain to the phamracist that the prescribed pill is a different color or a different shape than the previous order. Or, perhaps you may need a conversation with an email address?

    If routine medical procedures done by cut-rate clinics become the norm, who pays for the development of new procedures that may someday save your life, or make a disease extinct?

    I consider myself a handyman. I repair my car and most things in my house. Perhaps, if I had access to medical labs, I could keep track of my blood glucose and cholesterol levels and other things, and only see my Primary Care Physicial when I feel that I must. This, is a dangerous thought.

    I do believe the real solution to healthcare cost and quality is a matter of preventive maintenance. However, I do believe that an external advisor/trainor is needed to keep a person on track and motivated. I may think that I am doing fine, but a professional may think I need to do some things differently if I am to stay healthy. Healthy should include mental health as well as physical health.
    If you stay healthy, the need for the really expensive, complicated surguries man not be needed.

    Roger Provencher

  18. December 20, 2011 5:12 pm

    Very thoughtful. Many people respond well to an external voice, such as a coach. I am confident that does not always have to be a healthcare provider.

    • Jim Burgess permalink
      December 20, 2011 7:05 pm

      I agree with that. One of the challenges though is where the “medical industrial complex” weighs in on that though. One of the dangers of ACOs (and we note here in Boston four Pioneer ACOs springing forth this week) is that they are being “organized” by the system. Were we to have social worker/coaches/chiropractors/doulas etc. being the connector/organizers for real patient centeredness (which type will be most useful will depend on the array of conditions/situation of the patients, I am pretty confident the WalMarts of the world will figure this out), when I’ve raised this with physician specialists policymakers in the room they start arguing about who would buy them up and try to control them (PCPs seem most worried about being locked out of the power structure).

      Jim Burgess

  19. December 20, 2011 8:30 pm

    Here is a disruptive thought.

    We all know that 75% of healthcare costs are due to chronic conditions that afflict around 160 million people.

    A key problem we have is that there is no research or evidence to suggest that a hospital centric healthcare system, which is what we have, is any good at addressing the needs of this group of people and these costs. In essence, we have a healthcare system completed created for 25% or our costs, and it is the most expensive one in the world.

    The only way to address this issue is to create a parallel system that is outside the current system and relies less on doctors and nurses adn more on less expensive healthcare professionals that take months rather than years and decades to train and leverages technology in novel ways to radically transform care delivery.

    in this model, every hospital admission will be viewed as a failure rather than the current model which views it as a success as this is what ensures revenues. This is a pretty radical change in mindset.

  20. December 20, 2011 8:37 pm

    Thanks for taking the time to comment, Chris. Your wisdom is appreciated!

  21. December 20, 2011 9:21 pm

    I am a great believer in technology but tech alone is not the answer. I believe the biggest barrier to reinventing healthcare is the current payment system. Nothing new happens unless someone (insurance) pays for it. Perhaps some disruptive technologies can make some healthcare services so cheap that patients/consumers will avoid insurance and drive a new tech-enabled care model.

    I will throw out some ideas for improving US healthcare:
    1. Allow patients to contract directly for pirmary care with their PCPs, either fee for service or retainer-like relationship, allowing patients to make their own value decisions. This would help by removing 30% of the overhead, fostering innovation, self-care, telecare, and remote monitoring;
    2. Rebuild primary care in the US so that we have 70% PCPs and 30% specialists by:
    3. Paying PCP’s 30% more;
    4. Eliminating “Pay for Documentation”, which is currently required by insurance companies and Medicare, and;
    5. Subsidizing primary care education so there is less need for docs to enter high paying specialties
    6. Reduce insurance in order to encourage more private pay to create the economic stimulus for invention of better technologies and care models, e.g greater, not less, emphasis on health savings accounts or similar.

    • December 20, 2011 9:44 pm

      thank you. I agree with all of this except the ‘pay PCPs 30% more’. not sure its necessary and if we want to cut costs when 58% of our costs are labor, it doesn’t make sense to raise labor costs.

  22. December 21, 2011 6:10 am

    Thank you for this post.

    Personally, I would like to be enlightened about the drawbacks of direct primary care (monthly fee payable to doctor, low-premium/cheap health insurance for patient, extremely convenient office visits) powered by a connected EMR like Hello Health’s that enables billing for all the “customer support” services that patients are accustomed to from retail giants.

    This really feels like “the answer” to me.

  23. December 21, 2011 9:14 am

    the Hello Health model is a very innovative one. it is possible that this sort of model will indeed be the one that pulls it all together. While consumers seem comfortable paying for health/wellness/fitness, they are tepid re: paying for care when they are sick. If the Hello Health folks can convince patients/consumers to cross that barrier, they may be on to something.

  24. December 21, 2011 11:29 am

    I’d argue that the Personal Health Record is going to evolve into a disruptive technology. The logical trajectory of the PHR concept will marry deterministic rules engines running automated executable chronic care clinical pathways. PHR’s which are today, largely passive data repositories, will become data driven, personalized, longitudinal care management platforms. The PHR will become disruptive when an American Well-like organization makes the leap that the PHR has the established relationship with the patient (supplanting the doctor patient relationship). With the PHR as the hub, call centers and retail health providers (armed with deterministic clinical decision support tools) will disrupt the traditional primary care model.

    In a constantly rationalizing market, payers will continue to seek out lower cost alternatives.

    • December 21, 2011 12:08 pm

      I agree – I thought Christensen’s OTHER great insight was that rules-based disruptive technologies would be market-driven, not top down mandates like Meaningful Use.

  25. December 21, 2011 11:33 am

    This is a very interesting perspective. Thanks

  26. January 13, 2012 8:22 am

    The blog was very useful, I agree with all the points mentioned here in this blog. I hope the health crisis will be solved with some innovation ideas. I think if people stick to a balanced diet there will not be any health problem. As they say “Prevention is better than cure”… anyway thank you for sharing this with everyone.

    • January 16, 2012 10:14 am

      Thanks for your thoughts. Solving this puzzle will be a team sport, so let us know what you are thinking from time to time!

  27. January 19, 2012 4:49 pm

    Health care solutions focused on the concept of disruptive innovations have focused on creating new cost layers of service and incentives that ultimately provide lower quality care yet increased costs to the system. We need to stop amplifying the problem and the system needs to pay attention to streamlining access and delivery. Only by cooperation between the healthcare providers and innovation companies can we break dams that hold us at bay and work around legacy systems. mHealth adoption by compelled doctors noted by Dr. Reddy of Apollo is a product of their milieu as much as their capability with the technology and its impact to the outcome of their patient. The good news is there is currently an enormous focus on innovating in healthcare – change for the positive is imminent!

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