Disruptive Innovation in Health Care

Most people interested in innovation will have some familiarity with Harvard B-School professor Clayton Christensen and his classic books The Innovator’s Dilemma and The Innovator’s Solution. Christensen recently lectured at MIT on the topic of his upcoming book, The Innovator’s Prescription: A Disruptive Solution to Health Care. Christensen is an excellent lecturer and I recommend that you watch this video, courteously pointed to by Irving Wladawsky-Berger who also provides an excellent summary of the class. Make sure that you allot time for watching—the video is 88 minutes long.

Christensen spends the first half of the lecture reviewing the basic concepts of his first book: the process of disruptive innovation.

Here’s a tip for those who don’t want to watch the video or read his books: if you find yourself in a business that is happily conceding low-margin commodity business to small start-ups and happily retreating to the more lucrative high-margin business, be careful or you may end up as one of Christensen’s case-studies on extinction by disruptive innovation (you will never forget this lesson if you watch Christensen’s video).

I love the way that Christensen phrases his preventive medicine for avoiding extinction by disruptive innovation: create a division that is given an unfettered charter to kill the parent—imagine that mission statement on a conference room wall!

Christensen’s prediction for the future of health care (which begins around the 38–minute mark of the video) is that it will experience disruption due to three emerging technologies:

  • molecular diagnostics,
  • imaging technology,
  • high-bandwidth telecommunication.

Part of his message is something that I heard biotech guru Steve Burrill talk about a couple of years ago when predicting future trends in biotech: that better diagnostics will allow health care professionals to treat causes rather than symptoms. I’ve talked about how my field of hearing impairment will go through a similar transition, with better diagnostics allowing us to identify the physiology behind different hearing loss etiologies and provide individualized treatments. This falls under the general theme of individualization in health care, a future trend not only in my field by in health care in general.

For the rest of Christensen’s thinking on innovation opportunities in health care, check out the video—it’s worth the time.

7 thoughts on “Disruptive Innovation in Health Care

  1. Pioneer Portfolio of the Robert Wood Johnson Foundation has completed reviewing the entire set of entries received in the Disruptive Innovations in Health and Health Care competition. RWJF has announced that 11 entrants have been invited to compete for the $5 million in grant funding.

  2. More than 98,000 Americans die and more than one million patients are injured each year as a result of broken health care processes and system failures (IOM, 2000; Starfield, 2000). In addition, the gulf between the rapidly advancing medical knowledge base and the application of that knowledge to patient care continues to widen. In fact, barely 50 percent of patients in the United States receive known “best practice” treatment for their illnesses (Mangione-Smith et al., 2007; McGlynn et al., 2003). According to one survey, 75 percent of patients consider the health care system to be fragmented and fractured, a “nightmare” to navigate, and plagued by duplications of effort, poor communica- tion, conflicting advice, and tenuous links to the evolv- ing medical evidence base (Picker Institute, 2000).
    Poor quality is not only dangerous but also costly. David Lawrence, retired chairman and chief executive officer of the Kaiser Foundation Health Plan (2005), estimates that 30 to 40 cents of every dollar spent on health care, more than a half-trillion dollars per year, is spent on costs associated with “overuse, underuse, mis- use, duplication, system failures, unnecessary repetition, poor communication, and inefficiency.”
    Since the late 1990s, annual health care costs have risen by double digits—roughly three times the rate of inflation—claiming an increasingly large share of every American’s income, inflicting economic hard- ships on many, and limiting access to care. By 2006, the nation’s uninsured population had risen to nearly 47 million, about 16 percent of people under the age of 65 (DeNavas-Walt et al., 2007), and it has continued to increase since then.
    The immediate causes of this “perfect storm” of qual- ity and cost crises in health care are well understood. U.S. health care is a highly complex enterprise with a “cottage-industry” structure (i.e., many small-scale, interdependent service providers that act independently creating “silos” of function and expertise). This siloed system is sorely mismatched to the nation’s overrid- ing health challenge, namely, providing coordinated, integrated, continuous care to more than 125 million Americans who suffer from chronic disease. Seventy- five percent of U.S. health care dollars is spent on
    patients with one or more chronic conditions (Partner- ship for Solutions, 2002).
    This fragmented care system has been sustained by an outdated fee-for-service reimbursement model and regulatory framework that has rewarded health care pro- viders as well as drug, device, and equipment manufac- turers for providing high-priced services based on new medical technologies and procedures. While this frame- work has supported rapid advances in medical science and the development of increasingly precise diagnostic tools and therapeutic interventions, it has been indif- ferent to, if not discouraging to, innovation directed at harnessing advances in medical knowledge and preci- sion diagnostics to improve the quality and efficiency of health care.

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