Disrupting US Healthcare (Part 2): modularization & integration
Clayton Christensen students know that there are only two ways to innovate: commoditize & modularize, and integrate & capture value.
The increasing modularization and integration capabilities of our technologies have been accelerating disruptive innovation even in traditional sectors, such as transportation and real estate.
US Healthcare is not an exception, just moving slowly given its perverse incentive system and the information asymmetries I wrote about in this piece that could be considered Part 1 of this article: “US Healthcare: mainframes, ‘free market’, and the prisoner’s dilemma”.
Similarly to hotel chains, taxi companies, content producers, the national health insurance carriers (United Healthcare, Aetna, Cigna, the Blues) have created a market by aggregating supply (primarily), and demand (secondarily). Aggregation has been valuable given the high transaction cost of the industry, but luckily today’s technologies are particularly good at driving those down to 0:
- If you are a driver, you can directly find passengers via Uber without contracting with a Cab Company.
- If you have a room you want to rent, you can directly offer it to a tourist via Airbnb without opening a Hotel.
- If you are a writer, you can directly offer it via the self-publishing Amazon portal.
If you are a health service provider, from a primary care physician to a hospital group, to an innovative health tech solution, you could reach your patients directly, if you had the right platform to take care of the distribution and transaction management. I will call this Health OS.
In such a world, the investment that each health service provider would need to make would only be the amount required by the successful execution of their job (e.g., an office for primary care physician, a surgery room for a surgent, etc.), and not by distribution considerations.
The Health OS platform wouldn’t only make it easier for health service providers to reach their customers (individually or through groups — e.g., employers), but also would allow customers to select the health benefits/services relevant for them at any point in time.
Disruption is the manifestation of how technological innovation, and internet in particular as the synthesis of the last 50 years of Information Technology revolution, is shaping businesses:
“ If ‘the single most defining feature of the Internet from a business perspective is the removal of the means of distribution as the primary point of differentiation in a value chain’, it follows that the most important part of succeeding on the Internet is building a business model that aligns with jobs instead of the other way around.” 04/15/2019 Stratechery
Modularization thought it’s only a phase. All modular platform become integrated over time:
- iOS now has Apple Pay, Apple Health, Apple Maps, Siri
- Android now has Google Pay, Google Fit, Google Maps, Google Assistant
And best-in-class health services will eventually be integrated directly in the Health OS…
All views are my own.
