Will healthcare be disrupted? I'm not so sure.
It is likely the provision of healthcare will undergo a radical transformation over the next two decades. But whether it will be disrupted is another matter.
According to Clay Christenson’s infamous theory, disruption is a bottom-up process ‘whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.’
As Ben Thompson insightfully describes in his Stratechery blog there are two forms of disruption theory: the original theory of disruption, known as ‘new market’ disruption, and the second theory known as ‘low-end’ disruption.
The first alludes to the blind ignorance of incumbents to supposedly irrelevant technology. The second hypothesises the success of ‘good enough’ followers against the original integrated and high-end provider.
Despite the fetishy scaremongering of the pro-serv firms on the disruptive threat to traditional healthcare, I'm not sure either theory actually applies.
I suppose it depends from what angle you look at it.
Could a niche medical device manufacturer be disrupted — probably. Even so, whether a startup is pushing for ‘new market’ or ‘low-end’ disruption the barriers to entry in healthcare are massive.
Could ‘healthcare’ more generally, be disrupted — probably not. This is especially true in the UK, where public spending accounts for the overwhelming majority of total healthcare expenditure (this is gradually changing though — guess why). Here, the pace of change is not dictated by the normal dynamics of a B2B or B2C market.
That’s not to say I don’t think change with happen. I’m just sceptical whether healthcare transformation will prescribe to disruption theory (pun intended).
I think it’s more likely to come from all-stakeholder collaboration, than raw disruption. In the US, the shifting reimbursement landscape shows this in action. Administrators are working with established companies to mandate the rise of value-based care. The established players are fully aware of this change and, in turn, working with new entrants to create products and services that are appropriate in the new paradigm.
My other thought is that a number of the traits necessary for disruption are already dis-incentivised in the healthcare industry.
Firstly, ‘new market’ disruption (as stated above) relies on incumbent companies ignoring new technologies that don’t serve the needs of their customers or fit within existing business models, but the current model of healthcare actively encourages incumbents to get in bed with the hot-houses of new healthcare technology — universities. And this is becoming more and more common, as shown by the partnership strategies of many Big Pharma companies.
Secondly, ‘low-end‘ disruption (as stated above) occurs when customers reject an integrated or superior product for a modular offering, but would doctors or patients really accept a ‘good enough’ treatment? Basics like surgical consumables and generic drugs already exist through the current framework, and in more complicated areas I’m not sure the user experience can ever be ‘good enough’ in healthcare.
In short — expect change, but don’t expect the Uberisation of healthcare any time soon (and yes, before I get trolled, I am aware that Uber is not theoretically disruptive).
