Disrupting healthcare

I spent today at a Master’s Forum event in Minneapolis entitled The Innovator’s Prescription. There were great speakers and many insights (Michael Howe, former CEO of MinuteClinic, gave one of my favorite quotes of the day when he said, “When you hear those in healthcare speak of integration, that’s not the same type of integration consumers want.”)

But the most intriguing presentation came from the keynote speaker, Clayton Christensen. The professor of business at Harvard and author of the groundbreaking book, “The Innovator’s Dilemma,” has turned his sights on healthcare with a new book, “The Innovator’s Prescription.” Christensen’s primary premise in his first book is that what leads organizations to grow and become industry leaders – a focus on efficiency, the pursuit of higher profits, and a repeatable business model – are the same elements that eventually spell their doom. I can’t wait to dive into his new book to get the full story on how that applies in healthcare, but here are some of my key takeaways from the day:

• Christensen’s 20-plus years of research demonstrates that disruptive business models cannot emerge from within current industry leaders. They either come from new entrepreneurial businesses, or when a industry leading organization creates a separate business unit (separate in goals, leadership and location) to drive the innovation. So when I hear Dr. Denis Cortese, the current CEO of Mayo Clinic and a brilliant leader when it comes to healthcare reform, pitch his ideas for change, and how they reflect what the Mayo Clinic is doing, I wonder: will this be the first time ever disruption comes from within? Christensen claims it’s never happened before. Not sure I believe it can happen here.
• “The traditional general hospital is not a viable business model,” was perhaps the most clearly spoken wake-up call for me. Christensen says the hospital value proposition is “whatever is wrong, we can fix it for anyone.” What other business could get away with saying that, he says. A reflection of this model, according to Christensen, is that the typical hospital has more than 100 patient pathways, and he likens it to a manufacturing plant that’s trying to produce multiple products, many of which are customized for different customers. It’s no wonder hospitals can’t survive without philanthropy, regulatory benefits and restriction of trade. Trying to serve, on average, 100 different types of customer interaction within one facility is bound to be inefficient and unprofitable. He points to specialized hospitals, like Shouldice Hospital in Canada, which only does hernia repair, as examples of models that can deliver much better quality of care, a better experience, and a lower price, because of economies of scale, efficiencies, a focused body of knowledge, and more. (MinuteClinic is another obvious example of this specialization, around common, low-end family ailments.)
• Another great insight: the concept of a hospital emerged in an era decades ago when transportation and communication was expensive, and doctors and technology were cheap, thus creating demand for centralized medicine. Now, Christensen argues, the reverse is true, and he believes a drive to decentralization is key to healthcare reform. In simple terms, we need what happens in a hospital to become available in speciality centers, and what happens in specialty centers to become available in clinics, and what happens in clinics to become available in a doctor’s office, and what happens in a doctor’s office to become available at home. Here’s a quick question: there’s no reason the care and service received at a MinuteClinic can’t be delivered over the internet with the addition of simple home monitoring equipment and the right communications technology. Are there businesses out there right now readying that for the market?

All around, today’s conference was a terrific gathering of minds, giving attendees lots of ideas and challenges. I’ll let you know more as I dig into the book.