I grew up in Rochester, NY. Statistically, this means that I probably had a family member who worked at Eastman Kodak, as the company employed over 62,000 people in Rochester at it’s peak. I did, in fact, have two: my father and my brother-in-law. My brother and I both worked there during two fun and profitable summers of our college years in the delightful “roll coating” division. It actually paid quite well, but was miserable work.

Kodak was, at one point, the consummate American success story, dominating its market like few others. In 1976, it had a 90% market share of film, as well as 80% of cameras sold in the US. Kodak Park, the property at the center of manufacturing once employed 29,000 employees, with its own fire company, rail system, water treatment plant, and continuously staffed medical facility.

Fast-forward to 2012, and the picture changes dramatically. In a single year, Kodak declared chapter 11 bankruptcy, received a warning from the New York Stock Exchange that its stock was below $1/share for long enough that it was at risk of being delisted, announced it is no longer making digital cameras so as to focus on its core business: printing, and then a few weeks ago announced it was no longer making inkjet printers. The job force in Rochester alone has gone down by nearly 90%, to an estimated 7200 employees. (All of this info came from Wikipedia, if you wondered).

Adding pain for former Kodak fans was the announcement in April of this year that Facebook was buying the photo sharing company Instagram (which employed 13 people at the time) for an estimated $1 Billion.

So how could a company so dominant be overcome by one with only 13 employees? Didn’t the resources of Kodak give them anything better to sell than this small start-up? And what spelled the doom of a well-proven system of photography that fueled one of the most successful companies of its time? Was it acts of congress? Was it passage of a photography reform bill, or Obamachrome? Was it formation of ACO’s (accountable camera organizations), the use of the photographic centered media home, or the willingness of the government to pay photographers over $40,000 if they prove they use digital cameras in a “meaningful” way?

No, the success of Instagram at the expense of the wonderful folks up in Rochester happened because Kodak had too much at stake to embrace a disruptive technology that spelled doom to its business model. Even if Kodak had embraced digital technology, wouldn’t they have still had to lay off tens of thousands of people in the process? Wouldn’t they have had to stop making film, printing paper, and doing all of those tasks on which they had built a 90% market share? The Kodak of my childhood, the one that paid for my college education, gave a canvas for Hollywood’s imagination, and inspired Paul Simon to write one of my favorite songs, that Kodak had to disappear because something better came along.

It used to be that photography was a mysterious process to most consumers. They bought film from Kodak without understanding how it worked. Kodak succeeded by making the process easy enough for the average person to do. People used the camera without knowing how their pictures would turn out, sent the film off to get it magically transformed into photographs that they could show others. Ironically, the company that literally made black boxes made billions by keeping the process a black box for most people. Then came digital photography, cameras on phones, and eventually social media. Now there was no need for film, no need for cameras, no place to send the photos to get developed, and even no need to be on the same continent to share pictures with people. Technology eviscerated Kodak’s business model by removing the black box. It wasn’t just digital cameras that doomed Kodak, making it easy to carry cameras everywhere and to share with people instantly was also needed. Now you just take a picture on your phone (or camera) and share directly with anyone in the world.

It seems to me that this may be a way to envision health care reform. Health care has previously been a black box to most consumers – a mysterious process by which the high priests (doctors) would perform healing through the use of their special knowledge and the wondrous healing of medications. But unlike Kodak, health care was able to keep raising prices instead of becoming more efficient. Now the health care industry has an economy larger than nearly all countries on this planet. The number of people employed by this economy is staggering, and the number of businesses built off of this model of inefficiency is huge. Imagine the damage an “Instagram of health care” could cause.

That is why I no longer feel that the solution to our problem will come from within the system: the system itself must be eviscerated for it to survive, and most systems (like Kodak) don’t see evisceration as a good business strategy. Legislators may pretend to pursue meaningful reform, but far too many of their constituents stand to lose their jobs if they succeeded, and far too much of their campaign funds come from companies built on the old economy of waste. Having hospitals oversee ACO’s is like putting Kodak executives in charge of laws concerning digital image sharing.

So what would the “Instagram of health care” look like? I think it would:

Rely on technology to simplify things greatly.
Use social technology to cut out black boxes.
Put the control of care in the hands of the people who use it.
This sounds quite familiar to me.

When I was first thinking about changing to a direct care practice, I bounced some of my ideas off of a guy sitting next to me in a plane. He was intrigued by the conversation I was having on the phone as I got on the plane, discussing my ideas with an EMR vendor. As opposed to the EMR vendor, this gentleman grasped the power and simplicity of the model immediately, even making a pitch to partner with me if I felt I needed help. I deflected his kind offers, and have since lost his business card, but one thing he said has stuck with me. ”If this is a good idea, there will be someone who opposes it. There always is,” he said. ”Who do you think will fight you on this?”

I was stumped. Who would oppose a better life for doctors, better care for patients, and a huge cost savings? The answer, of course, comes clearly into focus by considering back to the demise of Eastman Kodak. While the 60,000 + people who lost their jobs in Rochester are undoubtedly using their cameras to take pictures and sharing them over social media, the wonder of this technology came to them at a terrible cost. Yes, the cost was necessary and inevitable, but they would have opposed it if they knew the precarious nature of their company as it sat in the crosshairs of a future company run by 13 people.

I hope I am wrong on this, but most eviscerations aren’t pretty. Trust me on that one; I’m a doctor.

Rob Lamberts, MD, is a primary care physician practicing somewhere in the southeastern United States. He blogs regularly at More Musings (of a Distractible Kind)where this post first appeared. For some strange reason, he is often stopped by strangers on the street who mistake him for former Atlanta Braves star John Smoltz and ask “Hey, are you John Smoltz?” He is not John Smoltz. He is not a former major league baseball player.  He is a primary care physician.

31 replies »

  1. Agree that politicians on both sides have their own interests at heart. Don’t understand how the American people keep thinking that if someone “cares” that it matters. Caring is a perception, action and results are what we should look for. In health care, I don’t think these same people would feel the same if their doctor gave them the wrong medicine, caused them harm, and then said he was sorry, and that he cares a lot about what happens to them. We need competence and we have the choice right now of more incompetence or a little less than we have now. Big government, big health care, it all stinks. It is continuing to fill the trough so all the folks in line (politicians, healthcare extras, insurance companies, drug companies,) and now congress can have a little something to eat on the tax payer dollar.

  2. I think the classification of poverty has changed in the last few years. In third world countries we see skinny, starving children, with swollen bellies and no mosquito control so they get malaria. In the United States we see inner city children, with big screen tv’s, cell phones, and who represent a large number of the obese. Poverty in the united states is not what causes poor rankings. How about using poor statistical data such as countries who don’t count certain infants under (30cm) in their infant mortality rate. The problem doesn’t stop at healthcare. We can’t solve all problems by making health care available to all. If we could stop people from smoking and eating too much, we would get more for our money. I like the “old” saying an ounce of prevention is worth a pound of cure. Flying to India to get your heart surgery is only an option for a few people (statistically). It seems to me the essence of this article has gotten lost on a few.

  3. Completely agree. So glad someone else has said what I am thinking. Of course simplifying, cutting out all those people in the middle. Getting back to a more direct patient to caregiver model. But we are living at the moment in what I call the “too big to fail” mindset. The way people seem to think these days is it would be better to have Kodak just the way it was so that all those people could keep their jobs. Revolutionary change in health care will happen when it all crashes down. But their has been other revolutionary thought out their such as tax reform, but the giant industry and power claimed by our government has kept that under wraps for years. It might be a while before the fat cats in the government, who now have their hands on a good portion of the US economy with health care want to give up the purse strings. Great article.

  4. Oh, and the “supportive comment in the middle” meant middle of the article. Details, details!

  5. Ahh, denial is a play on words for “the nile”, has nothing to do with political reference but just the usual defenses of the extremist right AND left, sir!

    And leave it to what seems like a partisan quick retort to just dismiss and demean opinion that seems to have some validation. Really is a shame we can’t get a third party, at least an independent candidate, to show how disingenuous, fraudulent, and basically devoid of any real interest in representation both sides of the Republocrats we have to hold our noses and look away when voting.

    Again, your choices America are either abandonment or enslavement. Not that the public really cares anyway, just “gimme my stuff” mentality that the boomers have really effectively entrenched amongst us.

    Oh, and by the way Peter1, nice job of all those indictments and prosecutions of those scoundrels your party screams at us as the cause and never ending continuation to “legitimize” the ongoing economic ruin that continues to now. Yeah, that denial thing, don’t wade out too far dude!!!

    It is pathetic how the general population thinks politicians and bureaucrats will fix health care, and how these simpleton citizens think they will live to 90 to see it be a wonderous experience. NOT!

  6. Determined,

    The “middle”, really – especially that the article is from comments by the American Enterprise Institute, through the neutral eye of George Will?

    Are the unrealistic expectations of the voters that way because of the unrealistic promises of politicians who never deal in the truth and take corporate bribes while claiming to represent the “people”?

    It serves the benefit of the corporate scoundrels (none prosecuted) who brought us the financial collapse that they now blame government for not enough oversight when they spent decades lobbying ($$) for cheap credit, low taxes and zero regulations – with Greenspan’s blessing.

    It’s no surprise that Romney (rich guys shill) is now offering us more of the same, because Americans have zero memory to connect the dots and want everything solved NOW with no pain or sacrifice.

    Is it also not realistic that taxes can never be raised but can always be cut and that the ever widening gap between rich and poor is endlessly sustainable without social consequences?

  7. the cowardice that is pervasive in avoiding any honest discussion in this culture, at least what drives the cost of health care first and foremost everywhere you go, is the simple yet painful fact we cannot handle death, and everyone is “entitled” per much of the content at sites like these to get full court press care irregardless of likelihood of outcome.

    Aren’t any physicians who read and comment here a bit tired at least of watching people come into yours or colleagues offices/community health clinics/ERs/direct hospital stays/etc. and reveal rather quickly in the assessment process that some protoplasm was just not meant to be prolonged? That there is a quantifiable percentage of people, who have congenital, chronic, or flagrantly unfortunate trauma circumstances that have to raise the question of “why are we prolonging this process”?

    But no, that can’t be raised nor even considered. Face it people with any semblance of honesty and candor, you can’t even consider the concept of health care cost containment if you can’t consider human life containment.

    For every example someone will pull out allegedly supporting that it is never too late to give up hope and options, believe me when I say the next 66-75% of cases that are true similar circumstances do not have happy endings. But, we live in a culture right now that is focused on serving the 20%, the 80% be damned and just shut up!

    Overtolerance is as destructive and disruptive as intolerance. Hence the voting options we have in 3 weeks!

  8. Re: Barry Carol’s point: ‘The main reason for the low ranking (of USA Healthcare per capita) is poverty.’
    If that is true, then I must have been totally confused by what I thought were the following facts:
    1. I wrongly thought Cuba was a MUCH poorer country than the USA. Clearly their superior health system shows that they are much richer than the US
    2. The USA spends nearly 75% money on healthcare per capita on its citizens but still ranks 37th in the world. How does this reconcile with your explanation of poverty being the cause? Who ends up with all that money?
    3.The USA provides the best medicine money can buy. Nobody disputes this but you have to be able to buy it or at least be the slave of someone who can afford to buy it for you.

    No my friends across the Atlantic. The reason that Obamacare, Romneycare or any other care is going to fail is in your otherwise remarkable bill of rights which states ‘and Justice for all’ but not ‘and Healthcare for all.

    Obama is a lawyer and obviously must not let his team down by reducing massively expensive tort
    Romney is a businessman and also must not his team down and many of them are the ‘middle men’ of medicine, those creatures of medical care that are neither patients or doctors but sometimes very rich indeed and also included Obama’s lawyer friends

    Is an amendment to the Constitution prohibitively expensive?

  9. I know 2 patients who had liver transplants overseas. If they waited here, their MELD scores would have to be over 30 (NY residents on individual policies; these folks awaited MELD scores no higher than 20; they both had early encephalopathy). They are quite wealthy; however, now that they have returned, does anybody think that their Prograf, etc. is covered? Rejection? Recurrence of illness? Nope.
    Interestingly and as an aside, one of them would have exceeded their coverage limit ($1.4M) were it not for the ACA.

  10. Rob, Interesting view point, which I happen to agree with. The thing about Kodak and to some extent other parallels with other extinct companies from the 50s and 60s is that they failed to understand the business they were in and where the competition was coming from. Don’t look at other camera and film manufacturers came the cry ….too late! Agfa almost made the same mistake, as did Fuji!

    I think healthcare is falling into the same trap. Technology has a tendency to flatten the world as well as what were once unique skills. The ability to self diagnose and self medicate is now more possible because of technology. Doctors are in some cases hanging on for dear life just hoping they can get to retirement before they are subjected to your evisceration. Are doctors looking at other doctors as the competition, or should they be looking at other professions and technology as the cometition?

    In other countries, the cost of medical skills and technology are already forcing populations to seek alternative sources of medical skill – such as care by cell or smart phone. The high cost of medical skills and the ill formed structure of healthcare in many western countries but particularly in the US will force changes.

    THe days of doctors being omnipotent and irreplaceable are, I fear waning, as we put more responsibility onto other allied professions, supported by technology. This is being done, not only because doctors are over worked but also it helps rebalance the cost equation.

    We all know this has to be done, healthcare costs are unsustainable. That is the common cry, but no individual or group is prepared to step forward and volunteer to be the first to be reset! Not surprising! But this will inevitably force more catastrophic change later.

    Just my thoughts but would be interested in your response.

  11. “Do you think that employers’ coverage is not threatened?”

    I guess it could be sooner not later, I’m not in that loop. I guess behind the scenes employers could be planning a “revolution”, but I’ve not seen it yet.

  12. Do you think that employers’ coverage is not threatened? Don’t you think that the employers will be the first to grasp at anything that will pull them away from the huge cost of giving insurance to their employees? Employer insurance may seem like a haven to employees (although the increasingly high deductibles have made many feel uninsured), but it is like a noose which is getting tighter around the neck of employers. Now, with the mandate, they are not even able to throw up their hands and say they can’t afford it. I would say that things are disintegrating now and will do so at an increasingly fast pace from here on.

  13. Rob, I think there will be little change (pre-Medicare) until employers health coverage is threatened since that is 80% of coverage for Americans. Once that starts to disintegrate then government will be forced to act and providers (pre-Magna Carta kings) will be forced to negotiate.

  14. Don’t get lost in the hyperbole. The point of this is that the system won’t change itself. It must have something from the outside disrupting it and forcing it to change. Yeah, the government can try, but there is too much money sunk into the system for politicians to do anything significant. We can hope that something of this sort will happen, as the alternative is grim.

  15. “As for medical tourism, what happens if serious complications develop after returning home?”

    Ruth, as with any procedure anywhere you need to investigate the hospital and the surgeon. Who pays for “complications” if you get local surgery – why you do, no surgeon or hospital warrants, free of charge, their work.

    My surgery has ample time post-op, in the hospital and monitored, for problems to develop and be fixed.

  16. Ruth –

    I partially agree with your comment about the issue of medical complications as it relates to medical tourism. For an insured patient, though, it should be possible to receive good follow-up care back home if the surgical procedure was performed elsewhere in the U.S. assuming the hospital can provide good and complete records of what was done. Presumably, a foreign hospital could also provide decent records.

    The business aspect of healthcare, though, has nothing to do with our so-called international rankings. The main reason for the low ranking is poverty. In the U.S., we simply have (and tolerate) a much higher incidence of poverty in our population. People in poverty face a host of disadvantages and often lead high stress chaotic lives which, in turn, result in much higher rates of infant mortality and significantly shorter life expectancy than is typical of our middle class and upper middle class populations. Provider profits have nothing to do with it.

  17. Barry, I suspect hip surgery is not as debilitating following surgery as heart surgery. I spend about 5-6 days post-op in the hospital and 5-6 days at a local resort in additional recoup. One day prior to flight I get full checkup from surgeon. This is done all the time.

  18. Kodak has no excuse. Just like Xerox. These players did not see the digital revolution coming, one that has supplanted the industrial revolution.
    As for medical tourism, what happens if serious complications develop after returning home? If privately insured, you will unlikely be covered, and if uninsured, just have a mountain of money..enough to be your own insurance company. Good luck with that.
    Grassroots movements will reform the medical industry, but it will be one hell of a battle against entrenched and truculent interests. There is good reason why our health care ranks 37th in the world (NEJM, Jan 2010) and that is because health business is number one. Bottom-line economics is a potent force that spares little, as it rampages over the planet. This may be partially acceptable if sick people were not the ‘customers’. Follow the money and it is obvious.

  19. Peter1 –

    We’re starting to see more medical tourism within the U.S. due to increasing interest among employers. Lowe’s, for example, recently negotiated a deal with the Cleveland Clinic to provide heart surgery for its employees who need it. Since Cleveland Clinic’s home market is not growing, it was willing to provide a very competitive price for patients it would not otherwise treat. The benefit includes airfare for the patient as well as airfare, hotel and food for a companion.

    As for going to India fur surgery, my main concern, assuming there were no issues with either the surgeon or the hospital, would be my ability to tolerate the long flight home. I recall that four days after my heart bypass surgery, when the cab arrived at my house after the ride from NYC, it was all I could do to make it from the car to my front door before needing to sit down.

  20. The photo market did not need Kodak any more as soon as digital became available and cheap to consumers. For our (U.S.) health care to change there will have to be a cheaper better alternative that patients can use outside of the existing system. Health care here is a system, not a company or a technology that is easily replaced.

    My personal solution, as an uninsured person with resources, go to India at better than 1/2 the cost.

    I recently was diagnosed with osteoarthritis of the right hip joint. Most of my cartilage was gone and the pain was getting worse over time. I was not ready to spend $25k to $35k cash for hip surgery here. I searched until I found a very competent surgeon (hip resurfacing) in a JIC accredited hospital (Apollo) in Chennai India. The package cost – $7000 complete, + airfare $1500 + hotel and post op resort about $1000 + food.

    We should be sending plane loads of Medicare and Medicaid patients to India – now that would be disruptive.

  21. Rob –

    While I agree that disruptive technology and innovation killed Kodak’s business model, I can think of at least four cultural issues driving healthcare costs higher in the U.S. that Kodak never had to face and are very difficult to change. They are:

    1. The culture among ordinary Americans, especially those 55 and older, who do not see it as their responsibility to execute a living will or advance directive and to speak with their spouse and adult children, if any, about what care they want and don’t want in an end of life situation. It’s the right thing to do but 75% don’t do it.

    2. The culture of litigiousness in our society that drives too many American patients to at least want to sue someone in the event of an unfortunate outcome even when doctors and hospitals did nothing wrong. This results in defensive medicine pervading the U.S. medical culture to protect providers from potential lawsuits but at high cost to the rest of us.

    3. The culture of fraud among too many American providers that results in way too much money spent inappropriately on everything from care never provided to unnecessary care to upcoding.

    4. The culture of opacity between insurers and providers that precludes both patients and referring doctors from easily ascertaining actual contract reimbursement rates paid for most services, tests and procedures. It’s a lot easier to sustain inefficiency when price discovery is impossible.

    Fix those four things and I’ll bet U.S. healthcare costs could decline by 20%-30% at least.

  22. CEO’s from non healthcare businesses might the people to implement Dr. Lambert’s approach to improving healthcare.
    Several prominent businessmen have voiced the need to control costs while improving care.

    But, none of these MBA’s have initiated actions that have made changes.
    Maybe Dr. Lambert would consider organizing these outspoken, concerned execs in order to implement his approach.

    I could develop my premise about the need for non-healthcare execs by using hard data.
    Robert A. England MD.

  23. Excellent article on the disruptive world in which we now live. It would be a different world if we had as many health clinics as McDonald’s (in similar locations and hours) staffed by Nurse Practitioners, all connected through social media. With my current health plan if I get injured or come down with an illness after 5pm or on weekends the emergency room is my only option. Sometimes I just need a quick answer to a medical question and find it difficult to trust the information found on the Internet.

  24. Agree that evisceration is too fast, as Rochester has watched the slow demise of Kodak over time. The difference not mentioned is that caring for sick people is always going to be a huge industry and won’t ever completely go the way of film and paper. The main point of this post is to address the questions: why doesn’t the health care system reform itself (because the cost to itself would be too high), and how will real reform happen (revolution, not evolution). The essential task of care will remain, but the industry built on the complexity and corruption of the system must go, and this is a larger thing than most people realize.

  25. The good news is at least in the US, we don’t burn heretics any more. I return to Uwe Reinhardt’s model of health care as pigs at the trough. Your model of disruptive technology to simplify the model of health care to one of the basic patient/physician model (beloved by Arnold Relman) threatens not only size, scale, but scope of the trough so the pigs/hogs must bury the scheme with complex regulations and process to assure purity of the status quo.

    Evisceration is way too fast. I’m thinking dry rotting is a better analogy with exterior remaining for illusion of continuity but innards rotting away. The hope of health care is that all health care is local and islands of health care sanity will expand and grow.

  26. Good strategy. And eviscerate the current HIT vendors and hospital executives whose devices and policies, respectively, do just the opposite of enabling doctors to :

    ” Rely on technology to simplify things greatly.
    Use social technology to cut out black boxes.
    Put the control of care in the hands of the people who use it.” ‘