Distruptive Innovation

I just finished the book The Innovator's Prescription by Clayton Christensen, (co-authored by Jerome Grossman and Jason Hwang) last weekend and thought it was an interesting book for people to read that are in the healthcare field.  If you have never heard of disruptive innovation it is a must read for people who want to make changes in healthcare and hospitals.  My question is, how do we do that?  How do we make some disruptive changes in the healthcare field?
Christensen talks about healthcare providers and how he believes they can come up with a solution.  There are three ways, the value-added processes, solution shops, and facilitated networks.  Most hospitals have a model where there is both value-added and solution shops which Christensen finds to be very inefficient.  What I liked is Christensen gives us a couple of examples of hospitals that he thinks are doing a good job in providing healthcare in the models described above. I encourage people to check them out and see why.

The first one I wanted to talk about is Geisinger Health System (which from what I have read is really doing things right).  Geisinger focuses on integrating wellness with a fixed-fee provider system.  When you go to their website, you can see their focus right away.  The top four tabs say "For Patients, For Professionals, Research & Clinical Trials, Innovations"  They are one of the top 10 hospitals in the nation and there is a reason for that.  With a focus on Wellness they have been able to decrease cost.  Their healthcare model has a ripple effect as seen in their financial summary for 2010 where it stated "The economic benefit to Pennsylvania (from direct spending and an indirect ripple effect of spending) totaled $4.6 billion, as reported by The Hospital and Health System Association of Pennsylvania"  This is amazing since hospitals all over the nation are struggling to increase their profit margins in a time where reimbursement rates are declining and regulations are increasing.

Another Health system Christensen talks about is the National Jewish Health.  They are what Christensen calls a solution shop.  He gives the example of a friend who suffered from asthma and had large expenses in prescription costs every month but he was still having problems despite the large amount of money for scripts and the many doctors he saw.  When he went to the National Jewish Medical and Research Center, he was able to work with a team of specialist that were able to focus on the root cause of his asthma and solved his problem.  How did they do it?  As stated on their website, they are "known worldwide for treatment of patients with lung, heart, and immune diseases and for groundbreaking medical research.  Founded in 1899 as a nonprofit hospital, it remains the only facility in the world dedicated exclusively to these disorders."  They are ranked #1 in respiratory care in the nation according to their site.  They are able to do this because they only focus on particular diseases and therefore are able to have a set of test that can be performed and then the specialist come together, review the test, and have a straightforward therapy for the patient.  Since they are working together instead of separately this is more patient focused and the solutions are more effective both with time and money.  Their primary focus appears to be on research as seen in their strategic plan on their website.  The only time it talks about patients is in their "clinical" section where they say "increase patient care to support greater breadth and depth of services; improve quality and performance; and take a leadership role in individualized medicine and personalized healthcare."  The rest of the strategic plan talks about research, faculty, entrepreneurial ventures and philanthropy (which in their statement consist of increasing donor base and funding opportunities).

The two hospitals have very different models.  One is the fixed-fee integrated system with a focus on wellness and the other is a solution shop with a focus on certain disease process to more effectively diagnose the problem and then are reimbursed on a fee-for-service.  It seems to me that what Geisinger Health Systems has more of a patient-centered focus which in my opinion is a better way of disrupting innovation.  Although both hospitals have great concepts, in the big picture what is really going to change healthcare is the economic benefits that can be seen in the billions in the Geisinger Health System.  Both have a strong focus on research but Geisinger focuses on increasing value for the patient and National Jewish Health research focus is on integrates clinical and promotes innovation and collaboration.  Neither is right or wrong, but when companies loose sight of the customer (in their case the patients) in the big picture, they ultimately will not be as successful at disrupting. 

If you want to have a better understanding of how disruptive innovation works, I highly recommend the two 9 min videos that the co-author Jason Hwang