The Innovator’s Prescription #1

The Innovator’s Prescription: A Disruptive Solution for Health Care by Clayton M. Christensen, Jerome H. Grossman, and Jason Hwang (New York: McGraw-Hill, 2009), 441 pages, $32.95

I am reading The Innovator’s Prescription (InnoRx) and tracking it on Twitter and the blogosphere.

As described in InnoRx, disruptive change is never led by the established members of an industry. Change led by members of an industry is simply the normal evolutionary process of business improvement. That kind of change is almost always gradual; disruptive change often has a gradual phase but eventually becomes revolutionary.

The value of studying disruptive change is not to find a prescription about what to do. InnoRX does not tell practitioners what to do. Instead, it provides models to use to examine the practice or business of medicine. The models provide both suggestions for improving the business—more revenue, less cost, better service—and radar warnings of threats. Forewarned is forearmed. Failure to pay attention to threats on the horizon leaves any business vulnerable to marketplace obsolescence.

Until recently patients’ options were pretty much limited to hospitals, doctors’ offices and variations on those two themes. Change in that environment is almost always evolutionary. Problems with America’s health care—particularly cost—have reached a point where evolutionary change is not adequate to meet current and future needs. The current state of health care is increasingly being referred to as a state of “crisis.”

Alternative practices are being developed. Most patients are skeptical about new and “unproven” alternatives so the rate of adoption of changes in clinical and business practices begins slowly. Because of this slow rate of change, these changes pose little or no apparent threat to current members of the industry. Using the models in InnoRx, identifying the potentially disruptive changes on the horizon, looking at vulnerabilities in current practices, and listening to the public/ corporate/ governmental expressions of concern about the current state of the industry provides new ways of assessing the threats and developing appropriate responses.

We can never be certain about the future. However, a carefully considered plan that is periodically updated provides a much higher probability of long term business success that relying on a late-term knee-jerk reaction to whatever the future may bring. InnoRx provides models and examples of threats useful in developing and maintaining carefully considered plans. It is a prescription for planning; not necessarily a prescription for action. It provides illustrative examples of disruptive threats based on experience in other industries and extensive analysis of healthcare. It provides illustrative responses to these types of threats and examples of the consequences of ignoring them. It strongly recommends using the examples to plan and, as part of that plan, to set triggers for more detailed planning and/or action.

Disruptive changes are initiated at the edges of an industry or outside of it. InnoRx uses MinuteClinc by CVS and other “retail clinics” (RCs) as an example of an external threat and provides models to assess that threat to current business practices. The existence of RCs does not require any action on the part of physicians. RCs will do whatever they do to expand their business and earn an acceptable rate of return on their investment.

On the other hand, physicians will almost certainly see some of their practice disappear. For many patients, but not all, RCs are cheaper (on the order of 30% cheaper), faster even without an appointment, and more convenient (up to 24/7). Physicians who see the threat and take appropriate action will minimize the loss and will develop alternative services to replace the lost revenue.

RCs offer links to personal health records (PHRs) such as HealthVault (Microsoft) and Google Health. Patients can now use an RC, have the results added to their PHR and upon their next visit to their primary care physician he/she can have—between the PHR and the physicians’ records—a complete medical history. A physician who participates with the patient’s PHR can update their records so the next time they go to an RC, the RC will have a complete medical record to work with. Most patients probably won’t change primary care physician just because their physician does not participate in a PHR, but if they do need to find a new physician, that participation will be a factor in their selection—particularly if they ask the RC for a recommendation.

A physician with a plan will see the threats coming and will take small, deliberate, less expensive and less disruptive steps to counter the threat, e.g., consider participating with one or more PHRs. A physician without a plan will probably not see a slow moving threat until it is too late to protect some of his/her established patient base. Again, the value of InnoRx is not in a set of prescribed changes for business practices as found in the book but in a plan to identify and think about responses to those threats.

Stay tuned.

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One response to “The Innovator’s Prescription #1

  1. I am re-reading InnoRx and today I am focusing on chapter 4 – disrupting the physician’s practice busines model.
    You have provided some thought provoking analysis Hal!

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