by Brian Eastwood

Solving Healthcare’s Disruptive Innovation Dilemma

News Analysis
May 07, 20145 mins
Healthcare IndustryInnovationMarkets

Most innovation in healthcare to date has only sustained the status quo. That's obviously not working. Where, when and how the industry will get the sort of 'disruptive innovation' made famous by Clayton Christensen remains to be seen.

If you need any evidence that the United States needs to rethink its healthcare model, look no further than the typical hospital.

Within each building, says Clayton Christensen, the Harvard Business School professor who defined the concept of disruptive innovation, you tend to find three competing business models, each with its own profit model. There’s the fee-for-service R&D and diagnostics “solution shop,” the fee-for-outcome process businesses that conduct medical procedures, and the fee-for-membership facilitated networks that provide long-term care.

“Typical hospitals are not complicated,” Christensen said at the recent Better Health Boston forum. “They are impossible.”

It’s no surprise, then, that healthcare needs disruptive innovation. What remains to be seen, though, is how soon that innovation will arrive and what kind of impact it will ultimately have.

Today’s Hospitals Too Centralized for Disruptive Innovation

American healthcare’s primary problems can be boiled down to two key issues, Christensen said at the event, sponsored by healthcare IT vendor McKesson and consultancy Innosight. Innovation has been sustaining as opposed to disruptive, he says, while the process remains largely centralized. Hospitals offer the value of solving any problem for any patient, he says, but the overhead of that complexity leads to tremendous costs. (The same is true of higher education.)

[ Analysis: Why Healthcare Needs Amazon (or Anyone) to Shake Things Up ]

[ More: Healthcare Waiting for Its ‘Blockbuster Video Moment’ ]

On top of that, most care is provided using what Christensen calls a modular, open architecture. This works for Samsung in its efforts to take down Apple, as it’s a model that emphasizes speed, responsiveness and customization, but it doesn’t work in healthcare. The industry needs a closed, interdependent, decentralized and integrated system, he says, one in which facilities focus on doing a particular job very well.

If that’s the case, then the disruption may already be happening. Retailers, building on the success of their rewards programs and advertising campaigns, are starting to use that influence to try to catalyze behavior change. Walgreens, for example, can use its product recommendation technology for healthcare recommendations and reminders, says Brian DeMay, CIO for enterprise architecture at Walgreens, who spoke at the recent Oracle Industry Connect event.

Traditionalists may scoff at the idea — but Walgreens sees 6 million patients a day, DeMay says, and the retailer uses data from wearable tech such as the FitBit to offer coupons to customers who achieve fitness goals. That data, combined with additional records, lets Walgreens produce a Wellness Index to help fill gaps in the longitudinal medical record, which is based less on physician-patient encounters and more on a patient’s overall healthcare experience and wellness needs.

‘Morally Wrong’ to Focus Healthcare on Anyone Other Than Patients

That approach to the patient experience represents another disruptive innovation. Organizing healthcare around doctors and insurers as opposed to patients is both morally wrong and a driver of out-of-control costs, says Alexander Packard, chief operating officer at Cambridge, Mass.-based Iora Health.

For that reason, Iora has started from scratch to better meet patient needs. It’s a high-service model, Packard says, one that pairs patients with health coaches skilled in “motivational interviewing” and other techniques that let the provider develop a care plan based around life goals, not just calling the doctor when youre in pain. After all, once that happens, it’s typically too late for low-cost preventive care.

[ Related: Improving Patient Engagement Equal Parts Technology, Empathy ]

[ Also: What Hinders Healthcare IT Innovation (And How That Can Change) ]

To that end, Iora assigns its patients a “Worry Score.” This algorithmic system combines payer, clinical, hospital and patient-generated data to tell a practice’s physicians which patients require their attention, Packard says. The system will also generate tasks based on that score, ranging from an automatic reminder to schedule an appointment to a call to action for a physician to visit a patient admitted to the hospital overnight.

“We think the killer app is the relationship,” Packard says.

Must Remove Constraints From EHR, Clinical Systems

This relationship extends beyond individual patients and their physicians. Coordinated care among healthcare entities is a main tenet of healthcare reform’s accountable care organization (ACO) model — but even at a more basic level, collaboration improves research, care guidelines and decision support, all of which contribute to better care quality.

Here, as is so often the case in healthcare, technology needs to catch up. Speaking at Medical Informatics World, Dr. Jacob Reider, acting principal deputy national coordinator of healthcare IT, said the document-centric electronic health record (EHR) hinders providers as well as developers.

Paper records literally had no constraints, but trying to anticipate user needs in EHR systems has added constraints that “destroy usability of the products and destroy the workflow of clinicians,” Reider says. Providers struggle, meanwhile, because records stem from single appointments (for the sake of reimbursement) as opposed to a series of observations about a patient’s overall health and wellness.

[ Analysis: Why the EHR Market Is Poised for Disruption ]

[ Also: Forrester Outlines IT Imperatives for Healthcare Providers ]

In this case, the disruption, still not yet wholly achieved, involves a shift from official, government-defined meaningful use of EHR technology to more literal, sustainable “meaningful use,” Reider says. This requires equal parts interoperability, safety, usability and health data infrastructure.

Then and only then will healthcare be able to advance as Christensen says it can — from intuitive medicine (based on one symptom that many diseases share) to empirical medicine (based on patterns that apply to a general population of patients) to precise personalized medicine.

Along the way, nurses, clinicians and retail pharmacists will be empowered to do “increasingly sophisticated things” that turn those expensive healthcare encounters into affordable ones. “This is the mechanism by which we solve that problem,” Christensen says.

Brian Eastwood is a senior editor for He primarily covers healthcare IT. You can reach him on Twitter @Brian_Eastwood or via email. Follow everything from on Twitter @CIOonline, Facebook, Google + and LinkedIn.