From The Dilemma to the Prescription: What We Must Know And Apply From Christensen’s Work
I filed into the auditorium for Grand Rounds, struggling to find an empty seat. It was 2015, and I was anxious to both hear directly from Prof Christensen — as well as to see others’ reactions to what he was going to say. What would the rows of doctors think about what the Harvard Business School Professor was going to tell them about how they delivered care?
Clayton Christensen, who passed away in January 2020, was a towering (more ways than one) figure in the world of innovation and disruption. He was a tall, bespectacled man with a kind and thoughtful demeanor that reflected his deep commitment to helping others. He was my favorite professor that I never took a class from.
“The Innovator’s Prescription: A Disruptive Solution for Health Care,” which Christensen co-authored with two other healthcare experts, applies his well-known theory of ‘disruptive innovation’ to the healthcare industry.
From The Innovator’s Prescription (Available through most libraries, including MCW’s library via OpenAthens)
A disruptive innovation is not a breakthrough improvement. Instead of sustaining the traditional trajectory of improvement in the original plane of competition, the disruptor brings to market a product or service that is actually not as good as those that the leading companies have been selling in their market. Because it is not as good as what customers in the original market or plane of competition of Figure 1.1 are already using, a disruptive product does not appeal to them. However, though they don’t perform as well as the original products or services, disruptive innovations are simpler and more affordable.
As I teach to our medical students in our Health Systems Management & Policy Pathway, Disruptive Innovation has a very precise meaning in these terms. Disruptive Innovation was featured in his earlier, 1997 book, “The Innovator’s Dilemma.” Organizations face a “dilemma” because they either keep going with their sustaining innovations or invest in change before they “need,” to in response to changing customers, markets, and technology. The parable about Blockbuster and Netflix is often invoked here, but the pattern is well represented across various industries from steel to healthcare.
The 2009 book notes that the current healthcare system is unsustainable (no argument there) and that it would be transformed and changed not by the blue-chip health care organizations of today but by new entrants who better could focus on addressing the needs of people in ever-more economical ways. Unless we changed, and learned from the past.
This book continues to factor heavily into how I look at innovation, and so I relished a chance to move from learning from Christensen through his writings and now to learn from him directly. His lessons directly related to my decision to join Inception Health and Froedtert & the Medical College of Wisconsin within the year of that lecture.
A leading indicator here, in healthcare, is that no one is happy.
What is our care (or business) model?
It’s jumbled, and ripe for disruption. The leading indicator here, in healthcare, is that no one is happy. Certainly, clinical providers and those working to care for people are stressed and leaving the profession. The lagging indicator that we are starting to see as well is the pressure to cut costs because labor costs have outpaced revenue.
I think that a good deal of US healthcare’s problem has to do with (1) prioritizing sustaining innovations over disruptive ones, because of the innovator’s dilemma, and (2) because we conflate our business models, currently simultaneously as we have most of our business in fee-for-service with a portion also under “value-based care.” We try to be a solution shop (we’ll treat anything) at the same time as we are trying to be a highly reliable organization that keeps people healthy.
Let’s dive in a bit more into these business models that Christensen writes about. Christensen et al describe three types of business models: These models are:
- The Solution Shop: A business model that focuses on delivering custom solutions to unique customer problems. Solution shops are often staffed with highly skilled professionals who are capable of solving complex problems through a combination of expertise and experience. In healthcare, this model is represented by hospitals and specialty clinics — we will solve any complex, undifferentiated problem.
- The Value-Added Process: A business model that focuses on delivering a standardized product or service that adds value to the customer’s experience. Value-added processes are often highly efficient and can produce high-quality results at a low cost. In healthcare, this model is represented by primary care clinics and other low-acuity care providers.
- The Facilitated Network: A business model that focuses on creating a platform that connects customers with other customers, suppliers, or service providers. Facilitated networks are often highly scalable and can create significant value by enabling customers to access a wide range of products and services. In healthcare, this model is represented by health insurance companies and online health portals.
You’ll likely agree with me that we tend to be a bit of each, and we incur tremendous inefficiencies as a result. The current healthcare system is designed around solution shops (intuition from highly trained experts/specialists), which means that value-added processes are often bundled together with other services that patients may not need. This can result in a lot of waste and inefficiency, as patients may have to go through multiple steps to receive the care they need. Additionally, solution shops are often designed around the needs of healthcare providers, rather than patients, which can make it difficult for patients to get the care they need in a timely and cost-effective manner.
Disentangling value-added processes from solution shops to unlock disruptive innovation
The concept of disentangling value-added processes from solution shops in healthcare is about separating out the work of each to focus on their underlying parts, jobs that they are fulfilling for people, and how they can be optimized.
Primary care is generally subsidized by acute care hospitals within health care networks, in part for downstream referrals and other care. But what if it needed to stand on its own? Would it look the same? Probably not.
Clearly, many value-added processes can be moved into the digital sphere, where they can be delivered more efficiently and at a lower cost. For example, telemedicine can be used to diagnose and treat patients remotely, which can be more convenient and cost-effective for both patients and healthcare providers. Additionally, digital entry points can be used to direct patients to the right solution shop faster, which can reduce wait times and improve the overall patient experience.
Change
From the floor of the auditorium, the words were fairly stark. Professor Christensen had noted that with only very rare exceptions, sustaining innovation companies are generally not able to avoid disruption. *Gulp* That is unless they are able to really separate out business units.
My colleague who was running teledermatology at an academic health system years back was told to shutter the program, because it was moving patients away from the clinic where they could get biopsies and more detailed care (read higher margin care). This happens in most industries, where companies are not willing to sacrifice their exisiting business model for what is coming down the Pike.
When Froedtert & Medical College of Wisconsin started Inception Health, it immediately made sense. Here was a separate business unit, moved outside of the main walls of the parent company, meant to foster change. Within the year, impressed by the clarity foreseen, I made the change from Boston to Wisconsin.
But we have more work to do. And Inception Health will begin moving back to its core purpose of using innovation methodologies to find new, better, and more affordable ways to solve patient and clinician problems.
A big focus of our work has been our digital engagement platform. But what would happen if we found a new, more effective way to care for patients, led by digital, that focused specifically on the value-added process business?
There’s a lot more to come (and be written) in this post.
Christensen was known for his sharp intellect and his ability to distill complex concepts into simple, accessible ideas. He was a deeply empathetic person who was genuinely interested in understanding the challenges that people faced, particularly in the realm of healthcare. He was a gifted communicator and a dynamic speaker, and his talks on innovation and disruption were always engaging and insightful.
Despite his many achievements and accolades, Christensen remained humble and approachable, always eager to connect with others and learn from their experiences. I hope that all of you will read more of his work, and the work produced and shared by the Institute that bears his name.
I’ll conclude with the thought that we have a moral obligation to make care better and more affordable for people. And that means taking bold steps to change. If we don’t disrupt ourselves, someone else will do it for us.
What I’m Reading (and Re-Reading)
Traditional business models are set up to succeed in the fee-for-service, “sick care” business, not the value-based business of improving health by addressing the root causes of disease. As a result, health care organizations need a fresh start. They need new business models to address drivers of health and create better lives for individuals and communities. In this paper, we provide a data-driven and theory-driven analysis for why this is the case, and guidance leaders can follow to design or redesign their business models
Our research of leading, innovative health systems — combined with business model theory — provides a first-of-its-kind strategy guide and decision tool executives can use to determine which pathway is right for them.
3. The Innovator’s Prescription
Our healthcare system is in critical condition. Each year, fewer Americans can afford it, fewer businesses can provide it, and fewer government programs can promise it for future generations.
We need a cure, and we need it now.
With that in mind, The Innovator’s Prescription provides a comprehensive analysis of the strategies that will improve healthcare and make it affordable.
