Disruptive Strategy for Health Care
Some generic definitions of terms Christensen uses in many of his texts:
Solution Shop: "businesses that are structured to diagnose and solve unstructured problems. Examples are consulting firms, advertising agencies, R&D organizations and some law firms" (Christensen, xxiv). In medicine, these shops provide a diagnosis.
Value-adding Process Businesses: "take incomplete or broken things and then transform them into more complete outputs of higher value" (Christensen, xxv). Examples are in retailing, restaurants, and manufacturing. In medicine, the treatment after the diagnosis.
Facilitated Networks: "enterprises which people exchange things with one another" (Christensen). Mutual insurance companies are an example.
A "cascade" of disruptive strategies in health care might flow from the expensive general hospital (each with its Solution Shops, Value-adding Processes and funding from Facilitated Networks). It would cascade through Outpatients clinics, Doctors' offices, and, finally, patients' homes.
So what's the diruption? General hospitals are by their very nature, general. The more specific the treatment across the cascade, the more possibilities for lowering the complexity of the treatment and the clinicians, and thus, hopefully, the price of the interaction. Colonoscopies in a general hospital are expensive. While we don't expect to see them taking place in private homes, they are perfect processes to take place in a clinic set up to do just colonoscopies. The treatment speeds up, the price goes down, in theory.
As solution shops and clinics grow, the need for general hospitals will fall. Foreseeable problems include the large political clout of the hospitals which will resist clinics in retail stores and treatment shops set up to treat only one malady.
OK, so now you're saying, "We know all this. Where is the disruption?" Let's look at reimbursement. A simple statement might be that Doctors may do anything to treat a patient that they think makes sense. That's true, they may. But, if they want to get paid for their treatment, they have to follow very specific methodologies and approved treatments. If something falls outside what is approved, there are good odds they won't get paid for their efforts. So, obviously, doctors stay within the approved norms. Follow that by the fact that patients are shielded from the real costs associated with treatments, as their insurance, with its low co-pay, doesn't let them feel the pain as it were. An HSA is different. Set it up properly in a situation where an individual pays the full amount of an office visit from her HSA and suddenly she's upset about shoddy or unneeded service. Simpler solutions like a cheaper but just as successful medically clinic visit start to make sense.
The debate has just started. There is an interesting role for strategy in health care. Let's hope the health care system is listening.
Christensen, Clayton M., Jerome H. Grossman, M.D. & Jason Hwang, M.D. The Innovators Prescription. A Disruptive Solution for Health Care. McGrawHill. 2009.