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Clayton Christensen

This post highlights the findings of a paper released today by the Clayton Christensen Institute, “Seize the ACA: The Innovator’s Guide to the Affordable Care Act.

Since its passage in 2010, the Patient Protection and Affordable Care Act (ACA) has been analyzed by experts from nearly every political, economic, and health policy angle possible. Yet in the noisy debate about whether the legislation is good or bad and whether to implement or repeal it, we think there’s something missing: a rigorous but practical discussion of the innovation opportunities created by the legislation and the barriers to innovation it imposes.

To facilitate that goal, we analyzed the ACA through the lens of the theory of disruptive innovation. First articulated by Harvard professor Clayton M. Christensen, disruptive innovation theory explains how innovations that decrease cost and increase accessibility transform entire industries.

As existing products increase in performance and begin to exceed customer needs (think of next year’s biggest Cadillac model), low-cost, lower-performance alternatives created by new entrants take root in the low end of the market (think of next year’s smallest Kia model).

These new products are initially inferior in comparison to established products, but they become better and better until they “disrupt” and eventually topple larger incumbent competitors.

So how does the ACA affect the pace of disruptive innovation in health care? What opportunities does it create for innovators? What barriers does it inadvertently erect? Here are a few thoughts from our recent paper.

Continue reading “Disruptive Innovation and the Affordable Care Act”

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Two weeks ago I had the good fortune to be invited back to the South by Southwest Conference (SXSW) to participate as a judge of a digital healthcare start-up competition. SXSW, which takes place in Austin, TX, is historically an indie music gathering that has evolved into a massive mainstream music conference as well as a monumentally huge film festival, like Sundance times twenty. There are literally hundreds of bands and films featured around town. There has now evolved alongside this a conference called Interactive that draws more than 25,000 people and focuses on technology, particular mobile, digital, and Internet.

In other words, SXSW has become one of the world’s largest gatherings of hoodie-sporting, gadget-toting nerd geniuses that are way too square to be hip but no one has bothered to tell them. Imagine you are sitting at a Starbucks in Palo Alto, CA among 25,000 people who cannot possibly imagine that the rest of the world still thinks the Internet is that newfangled thing used mainly for email and porn. SXSW is a cacophonous melting pot of brilliance, creativity, futuristic thinking, arrogance, self-importance, ironic retro rock and roll t-shirts and technology worship. One small example: very hard to get your hands on a charger for anything other than an iPhone 5 because, seriously, who would have anything else?

Continue reading “The Napsterization of Health Care”

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“Will Accountable Care Organizations (ACOs) work?”

That question has been thrown around for years, serving as fodder for Twitter-fights, myriad health care blog posts, and hours of beer-soaked barroom debates (if you’re shameless as I am). Adding to the discussion are Clayton Christensen, Jeffrey Flier, and Vineeta Vijayaraghavan (or CFV, as I’ll refer to them), of Harvard Business School, Harvard Medical School, and Innosight fame, respectively.

In a recent Wall Street Journal article, they answer the question with a resounding “No.” But, in doing so, they treat ACOs and other health care delivery mechanisms – part of what I’ll call the “New New Thing in Health Care” – as mutually exclusive. Contra CFV, ACOs may help spur the exact disruptive innovation in health care that Christensen is known for discussing.

Continue reading “Really Big New Thing”

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Every time someone publishes an article or a paper or a blog post that has anything remotely to do with Electronic Health Records (EHR), there is usually a flurry of reactions in the comments section, now available in most publications, and these always include at least half a dozen anonymous statements, usually from clinicians, decrying the current state of EHR software, best summed up by a commenter on THCB: “It is the user interface stupid!… It has to be designed from the ground up to be an integral part of the patient care experience”. Can’t argue with that now, can you? Particularly when coming from a practicing physician.

And why argue at all? The user interface in any software product is the easiest thing to get right. All you need to do is apply some basic principles and tweak them based on talking to users, listening and observing them in their “natural habitat”. Having done exactly that, for an inordinate amount of time, and being aware that most EHR vendors were engaging in similar efforts, I found the growing discontent with EHR user interfaces somewhat inexplicable. The common wisdom in EHR vendor circles is that doctors are unique in how they work and whenever you have two doctors in a room, there are at least three different preferences in how the EHR should present itself. As a result, you will find that most mature EHRs have dozens of different ways of accomplishing the same thing. These are called “user preferences” and are as confusing as anything you’ve ever seen. Hence the notion that if you spend enough time configuring and customizing your EHR upfront, you will increase your chances of having a less traumatic EHR experience down the road. We were an industry like no other, doomed to build software for users with no common denominator, or so I came to believe, until one afternoon in the summer of 2006…..

Continue reading “Why Everything You Know About EHR Design Is Probably Wrong”

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In the current issue of The New Yorker, surgeon Atul Gawande provocatively suggests that medicine needs to become more like The Cheesecake Factory – more standardized, better quality control, with a touch of room for slight customization and innovation.

The basic premise, of course, isn’t new, and seems closely aligned with what I’ve heard articulated from a range of policy experts (such as Arnold Milstein) and management experts (such as Clayton Christensen, specifically in his book The Innovator’s Prescription).

The core of the argument is this: the traditional idea that your doctor is an expert who knows what’s best for you is likely wrong, and is both dangerous and costly.  Instead, for most conditions, there are a clear set of guidelines, perhaps even algorithms, that should guide care, and by not following these pathways, patients are subjected to what amounts to arbitrary, whimsical care that in many cases is unnecessary and sometimes even harmful – and often with the best of intentions.

According to this view, the goal of medicine should be to standardize where possible, to the point where something like 90% of all care can be managed by algorithms – ideally, according to many, not requiring a physician’s involvement at all (most care would be administered by lower-cost providers).  A small number of physicians still would be required for the difficult cases – and to develop new algorithms.

Continue reading “Do You Believe Doctors Are Systems, My Friends?”

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In a piece for the New Yorker, Dr. Atul Gawande outlined how, early in the 1900s, more than forty per cent of household income went to paying for food and food production consumed roughly half the workforce. Beginning in Texas, a wide array of new methods of food production were tested. After many pilots, tests and information dissemination, food now accounts for 8% of household budgets and 2% of the workforce. As a wide array of small innovations ultimately led to the transformation of farming, so too is a rapidly building wave of innovative new care and payment models leading to similar breakthroughs in healthcare. I call this Nimble Medicine.

Until recently, attempting a new care or payment model meant long planning and development cycles. The cost and complexity of testing new models prevented many from being tried. Even today, the leading HealthIT vendor is known to charge $100 million and up for its software. Amazingly, they require three months of training before they even let people administer the software.

Continue reading “Nimble Medicine”

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