4 Signs that Disruption is Accelerating in Health Care Delivery

4 Signs that Disruption is Accelerating in Health Care Delivery

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By REBECCA FOGG

Hardly a day goes by that I don’t read the term “Disruptive Innovation” cited in relation to health care delivery. This might seem like a good thing, given that our expensive, wasteful, and in some cases frightfully ineffective traditional delivery model is in dire need of transformation. However, the term is frequently misunderstood to refer to any innovation representing a radical departure from an industry’s prior best offerings. In fact, it actually has a very specific definition.

Disruptive Innovation is the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost have become the status quo—eventually completely redefining the industry. It has played out in markets from home entertainment to teeth whitening, and it could make health care delivery more effective by making providers’ care processes, as well as individuals’ own self-care regimes easier and less costly. This, in turn, would reduce the need for both more, and more expensive, interventions over time.

Unfortunately, disruption has been slow to emerge in the health care sector. It’s been thwarted by the broader health care industry’s unique structure, which tends to prioritize the needs of commercial insurers and large employers (who pay the most for consumer care) over those of health care consumers themselves. It also stacks the deck against disruptive entrepreneurs, since established providers effectively control professional licensing requirements, and (along with insurers) access to patients & key delivery partners.


Consequently, most innovation in recent decades has maintained the industry’s status quo. But as Clayton Christensen, Andrew Waldeck and I explained in our 2016 paper, conditions have been improving for disruption in health care delivery, and innovators have been capitalizing on them. At that time, we were particularly encouraged by providers like ChenMed, Iora, Oak Street Health, WellMed and others who were (and still are) developing and scaling potentially disruptive primary care models to help patients better manage complex, chronic conditions over time.

Even more encouraging is the fact that in the two years since we published our paper, disruption appears to be accelerating in health care delivery. Here are four indicators that led me to that conclusion:

  1. Health care delivery is attracting diverse and impressive new players. Apple. Google. Walgreens. Amazon. JP Morgan. These are just some of the companies with origins outside health care delivery who’ve very recently entered, or “re-upped,” their strategic commitment to the market. And when such giants of tech, retail, and finance dive into a different market, you know there’s a big problem to solve, and money to be made there. Why does this spell disruption? Because the innovations that ultimately disrupt a market are usually those created by market entrants, vs. historic market leaders.
  2. New players are targeting an important, unmet need in the market. These players don’t seek to improve the traditional health care delivery model, which is optimized to address episodes of acute illness or injury with reactive, one-size-fits-all treatments. Their ambitious goal is to create entirely new models. Many are designing them to address the important, unmet market need for continuous and proactive care. Their goal is to help people live the longest, healthiest lives possible. Walgreens’ new partnership with health insurer Humana exemplifies the trend. The companies are piloting primary care clinics in select Walgreens stores, with the explicit strategy of going “beyond addressing acute and immediate health issues” to focus on developing “long-term relationships with patients living with chronic conditions.”
  3. New players are shaping innovations to disrupt traditional health care delivery.  Companies entering health care delivery are innovating to make it simpler, more affordable and more convenient. The Amazon/JPMorgan/ Berkshire Hathaway health venture aims to leverage technology innovations toward that end, and Amazon’s extraordinary, tech-driven disruption of brick-and-mortar retailers bodes well for the venture’s success.
  4. The global market for population health management solutions is growing fast. Many would-be disruptors are employing “population health management” strategies, which use sophisticated data analytics to identify the major health risks and cost-drivers in a group of patients, and multidisciplinary care teams to work with patients over the long-term to manage their health better and more cost-effectively. Offering yet more evidence that disruption is accelerating in health care delivery, the market research firm MarketsandMarkets predicts that the global market in population health management solutions will be worth over $42 billion by 2021—more than tripling in value from 2016.

While these signs might be viewed as purely positive, Disruptive Innovations are not actually intrinsically good or bad; the nature of their impact depends on the need they are designed to meet, and the stakeholder considered. And indeed, as the force of disruption ripples through health care delivery, many dedicated providers, successful business leaders, talented innovators, and venerated institutions will be forced to change—a process that is as uncomfortable as it can be beneficial and exciting. But where Disruptive Innovation in health care delivery is designed to help Americans live the longest, healthiest lives possible, I believe it’s a win for society as a whole.

Rebecca Fogg is a senior research fellow at the Clayton Christensen Institute, where she studies business model innovation in healthcare delivery, including new approaches to population health management and person-centered care.

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3 Comments on "4 Signs that Disruption is Accelerating in Health Care Delivery"


Member
Today 4:02 pm

really nice blogging.

Member
HealthViewX
Today 6:17 am

Nice blog. Yes, today’s health care delivery is in dire need of transformation.

Member
pjnelson
Oct 5, 2018

After working for a large institution for many years, most people learn that the institution’s leadership regularly makes decisions that unfairly jeopardize the person’s capability to do their job at the institution’s front line. To augment this experience and its contribution to “burn-out,” I cite the definition of an institution, aka organization, as proposed by Nobel prize winning economist Professor Elinor Ostrom. An institution may be defined as follows:

“…the rules that humans use to organize all forms of repetitive and structured interactions including within families, neighborhoods, firms, sports leagues, churches, private associations, and governments, at all scales. Individuals interacting within rule-structured situations face choices regarding the actions and strategies they may take, leading to consequences for themselves and for others. The opportunities and constraints individuals face in any particular situation, the information they obtain or are excluded from, and how they reason about the situation are all affected by the rules or absence of rules that structure the situation. * If the individuals who are crafting and modifying the rules do not understand how a particular combination of rules affects the actions and outcomes in a particular ecological or cultural environment, rule changes may produce unexpected and, at times, disastrous results.” Please read the definition again, especially the last sentence beginning at ” * ” .

Just ask any Primary Physician during the 10th year of their professional career the following question and keep track of their answers. How much time in the last 10 years has an officer of your institution’s C-Suite spent in your office observing you or a colleague while Primary Healthcare was offered to a person. Over a ten year span of time, it will almost always be ZERO. The lack of awareness within the C-Suite of most healthcare systems about the daily dimensions encountered while offering individualized Primary Healthcare is essentially zero. Furthermore, an urgent care center or telehealth does not represent true Primary Healthcare.

So, the current efforts to improve the front-lines of Primary and Complex Healthcare are important and valuable. But, these will not solve the Paradigm Paralysis of our nation’s healthcare. Its cost and quality problems are profound. The words of Eric Hoffer apply: “In a time of drastic change, it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no long exists.” I offer a quotation from President Thomas Jefferson about institutional change at the reference cited below. Please note the last two words of President Jefferson and its correlation with the last two words of the quotation from Elinor Ostrom cited above, about 250 years later.

https://nationalhealthusa.net/humanitarian-mandate/heritage/