Harnessing Disruptive Innovation in Health Care
by Paul E. Plsek, MS, Paul E. Plsek & Associates, Inc.; Member Emeritus, Innovations Exchange Editorial Board
Harnessing Disruptive Innovation in Health Care
|By Paul E. Plsek, MS, Paul E. Plsek & Associates, Inc.; author, Accelerating Health Care Transformation with Lean and Innovation: The Virginia Mason Experience; former member, Innovations Exchange Editorial Board|
Health care innovations occur across a spectrum, ranging from small changes that improve some aspect of health care to major shifts that have sweeping effects on the entire health care industry. The latter type of change is often called disruptive innovation, a concept introduced in the 1990s by Clayton M. Christiansen of Harvard Business School to describe what happens when a new technology or business model causes the existing marketplace to change in fundamental ways.1,2For example, in health care, disruptive innovation may involve technologies, products, or services that are cheaper, simpler, and more convenient, making it possible for less-expensive professionals to provide advanced services in affordable settings, or even for patients to care for themselves.3 As discussed below, disruptive innovation involves fundamental shifts in thinking about the “four Ws” (the who, what, when, and where) of service delivery and its economics.4
To better understand the concept of disruptive innovation, it is helpful to consider some historical examples. An innovation such as the Apple iPod disrupts a marketplace by creating a whole new space for competition, in this case in the business of music distribution. Other examples of disruptive innovation in the general business world include the introduction of personal computers, the availability of ATMs and Internet banking, access to paralegals and Web sites that provide basic legal advice, and the spread of distance learning in higher education. The health care system has witnessed disruptive innovation caused by the marketing of home blood glucose monitors for people with diabetes, the launch of retail primary care clinics staffed by nurses and nurse practitioners, and the development of oral chemotherapy regimens. In recent years, health care entrepreneurs have been experimenting with using the Internet and mobile devices in ways that could change the marketplace, such as by facilitating remote access to providers and supporting patient self-management of chronic conditions.
Enablers of Health Care Disruption
Three ongoing trends in health care are accelerating the emergence of disruptive innovations, as described by Richard M.J. Bohmer, MBChB, MPH, a physician at Harvard Business School who has collaborated with Mr. Christiansen.5 First, the evolution of medical knowledge continues to lead to protocol-based care by nonphysician providers for patients with simpler conditions, while increasing the need for advanced skills in caring for patients with more complex conditions. Second, some health care organizations have been moving away from traditional department structures and focusing more on service lines for specific patient populations. Third, health care organizations are focusing less on revenue generated through service delivery and responding to market forces that emphasize accountability for patient outcomes.
In the context of these trends, a typical scenario for health care disruption involves a shift "from an unstructured, experimental, problem-solving process that demands a high level of professional expertise towards a rules-based regime that is less demanding.”6 Such disruption involves a shift in the who and where of health care. The locus of care moves away from tertiary hospitals and general hospitals and toward outpatient clinics, physician offices, and even the community and the patient’s home. This is accompanied by a shift in the provider of care, moving away from medical specialists and toward primary care physicians and nurses and potentially leading to self-care by the patient at home. Additionally, health care organizations are increasingly focusing on the health and health care needs of populations, including those who are well, rather than directing resources exclusively on those who seek care in a traditional health care setting.
A health care organization that wants to understand and perhaps introduce disruptive innovation should explore opportunities in terms of the four Ws mentioned earlier. This involves asking the following questions about the service delivery model for a specific type of care:
Effects of Disruption on People, Processes, and Organizations
Disruptive innovations are upsetting because they pose challenges for health care professionals and organizations. Innovations may disrupt professional practices, service delivery models, and patient referral patterns. Innovations also may upset conventional thinking about organizational operations and structure, market boundaries, and investments in equipment, technology, and staff. When responding to disruptive innovations, health care organizations may need to develop new strategic plans and redefine their competitors. At a personal level, disruptive innovations often trigger negative reactions because they can undermine individual status, reputation, ego, and power.
When leaders of health care organizations face the challenges caused by disruptive innovations, they must think strategically about the best way to respond. That means choosing one of three general options. The conservative strategy is to support organized efforts, both locally and industry-wide, to block disruptive innovations by characterizing them as untested and unsafe. The “second-mover” strategy involves identifying potential disruptions, letting other organizations pioneer the innovations, and being ready to respond quickly and effectively when an innovation is successful. Finally, an organization may follow the “first-mover” strategy of gaining a reputation as an innovator by identifying, pioneering, and publicizing disruptive innovations as business opportunities. All three of these options are legitimate strategies for dealing with the challenge of disruptive innovation in health care.
About the Author
Mr. Plsek is an internationally recognized consultant on innovation in complex organizations. A former research engineer at Bell Laboratories and Director of Corporate Quality Planning at AT&T, he now operates his own consulting practice and is the developer of the concept of DirectedCreativity.™ His health care clients have included the National Health Service (NHS) in England, Kaiser Permanente, the Veterans Health Administration, the SSM Health Care System, and the Mayo Clinic. Mr. Plsek is the chair of innovation at the Virginia Mason Medical Center (Seattle), an innovator-in-residence at MedStar Health (DC–Baltimore), the director of the NHS Academy for Large-Scale Change (UK), a former senior fellow at the Institute for Healthcare Improvement, an active research investigator, a popular conference speaker, and a former member of the Innovations Exchange Editorial Board. He is the author of dozens of peer-reviewed journal articles and seven books, including Creativity, Innovation, and Quality; Edgeware: Insights From Complexity Science for Health Care Leaders; and Accelerating Health Care Transformation with Lean and Innovation: The Virginia Mason Experience.
Disclosure Statement: Mr. Plsek is an independent management consultant who advises health care organizations on innovation strategy.