the innovator’s prescription - global health care, llcsolution shops (fee for service) focused...
TRANSCRIPT
![Page 1: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/1.jpg)
6/27/2009 Copyright Clayton M. Christensen 1
The Innovator’s Prescription: How Disruptive Innovation Can Transform Health Care
Clayton ChristensenHarvard Business School
![Page 2: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/2.jpg)
6/27/2009 Copyright Clayton M. Christensen 2
Centralization followed by decentralization: Computing
![Page 3: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/3.jpg)
6/27/2009 Copyright Clayton M. Christensen 3
Decentralization is disruptive, and is hard to catch
Perf
orm
ance
Time
Sustaining innovations
60% on$500,000
45% on$250,000
40% 20% on $2,000
Disruptive Innovations
Time
![Page 4: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/4.jpg)
6/27/2009 Copyright Clayton M. Christensen 4
The decentralization that follows centralizationis only beginning in healthcare
Surg
ical
su
ites
High-speed multi-
channel testersImaging: MRI,
CT, PET Scanners
![Page 5: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/5.jpg)
6/27/2009 Copyright Clayton M. Christensen 5
The pursuit of profit and differentiation in sustaining competition amongst similar business models generally adds cost.
![Page 6: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/6.jpg)
6/27/2009 Copyright Clayton M. Christensen 6
Disruption in business models has been the dominant historical mechanism for making things more affordable and accessible,
and for generating corporate and economic growth
Today• Toyota• Wal-Mart• Dell• Southwest, RyanAir• Fidelity• Canon• Microsoft• Oracle• Cingular• Apple iPod• Korea, Taiwan, HK
Yesterday• Ford• Dept. Stores• Digital Eqpt.• Delta• JP Morgan• Xerox• IBM• Cullinet• AT&T• Sony DiskMan• Japan
Tomorrow:• Chery• Internet retail• RIM Blackberry• SkyWest, Air taxis• ETFs• Zink• Linux• Salesforce.com• Skype• Cell Phones• China, India
![Page 7: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/7.jpg)
6/27/2009 Copyright Clayton M. Christensen 7Non-consumers
or
Non-consuming
occasi
ons
Diff
eren
t mea
sure
Of P
erfo
rman
ce
Time
Three Enablers of Disruption
1.Sim
plifying
Technolo
gy2. Business model
Innovation
Perf
orm
ance
Time3. New Value Network• Customers• Distribution• Suppliers
![Page 8: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/8.jpg)
Who can pull this off?• Integrated fixed-fee providers. They profit from
wellness– Reimbursement issues disappear– Licensing & accreditation don’t block disruption– Personal electronic medical records– Assessment of systemic value; integration of supply,
demand, and value to define price• Orchestrators that profit from wellness
– Major employers– Government cannot orchestrate6/27/2009 Copyright Clayton M. Christensen 8
![Page 9: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/9.jpg)
Rules-Based
6/27/2009 Copyright Clayton M. Christensen 9
Disruption is facilitated when historically valuable (and expensive) expertise becomes commoditized
Experimentation& problem-solving
ProbabilisticPattern
Recognition
TECHNOLOGY
PrecisionMedicine
IntuitiveMedicine
EmpiricalMedicine
Imaging & molecular diagnostics
![Page 10: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/10.jpg)
PROCESSES:
Ways of working together to address recurrent tasks in a
consistent way: training, development, manufacturing,
budgeting, planning, etc.
6/27/2009 Copyright Clayton M. Christensen 10
What is a business model, and how is it built?
PROFIT FORMULA:
Assets & fixed cost structure, and the margins & velocity
required to cover them
THE VALUE PROPOSITION:
A product that helps customers do more effectively, conveniently & affordably a job they’ve been trying to do
RESOURCES:
People, technology, products, facilities, equipment, brands, and cash that are required to deliver this value proposition
to the targeted customers
![Page 11: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/11.jpg)
6/27/2009 Copyright Clayton M. Christensen 11
Value Proposition:Don’t know what’s
wrong? We can address any problem you bring
Resources
ProcessesProfit formula
The Traditional General Hospital Is Not a Viable Business Model
![Page 12: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/12.jpg)
6/27/2009 Copyright Clayton M. Christensen 12
Polishing Dept.Turning machines
Hobbing departmentTapping equipment
Boring machines
Stamping machines
De-burring machines
Annealing furnace
Shi
ppin
g D
epar
tmen
t
Cut-offsaws
Path
take
n
by pr
oduc
t A
A s
tart
s he
re
Pat
h ta
ken
by p
rodu
ct B
B starts hereOffice area
Storage
![Page 13: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/13.jpg)
6/27/2009 Copyright Clayton M. Christensen 13
Sources & magnitude of cost differences: Value-adding process clinic vs. general hospital
9.02.7
751
$7,000$2,300
$6030$1600
$670$600
$300$100
General HospitalShouldice Hospital(hernia repair)
Cost of materials & supplies
Cost of direct labor
Overhead burden
Total cost for equivalent length of stay
# service families offered
Overhead burden rate
![Page 14: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/14.jpg)
6/27/2009 Copyright Clayton M. Christensen 14
Disruptive business model innovation in physicians’ practices
Value Proposition: The solution to any problem starts here
Resources
ProcessesProfit formula
Value Proposition: Fast, convenient
resolution of rules- based acute disorders
Resources
ProcessesProfit formula
![Page 15: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/15.jpg)
Fee for service Fee for outcome Fee for Membership, fee for use
Hospitals are expensive conflations of three types of business models
• Consulting firms• High‐end law firms• R&D organizations
• Diagnostic & intuitive activities of hospitals
Solution Shops
• Manufacturing• Education
•Food services• Medical procedures
Value-adding process businesses
• Telecommunications• Insurance
• EBay• D‐Life
• SimulConsult
Facilitated Networks
![Page 16: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/16.jpg)
Disjointed VAP Clinic
Disjointed Solution Shop
TodayCoherent Solution Shop
Hypo- thesis
Treat- ment
Coherent Value-Adding Process Clinics:Orthopedic, hernia, eye, etc.
Stage 1 Primary care physicians disrupt
solution shops
Stage 2
6/27/2009 Copyright Clayton M. Christensen 16
Disruption of the hospital business model
Physicians’ assistants disrupt
physiciansResources
ProcessesProfit formula
![Page 17: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/17.jpg)
Breaking the trade-off• The cost is in overhead.
– Focus reduces overheads• Quality comes from tightly coupled integration
– Focus on a job enables appropriate integration• The concept of hospitals emerged when
transportation was expensive and doctors were cheap.
• Costs will fall and outcomes will greatly improve when focused solution shops emerge for major categories of disease6/27/2009 Copyright Clayton M. Christensen 17
![Page 18: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/18.jpg)
© 2007 Innosight LLC 18
Market Understanding that Mirrors how Customers Experience Life
“The customer rarely buys what the company thinks it is selling him” - Peter Drucker
What jobs are students trying
to do?
•Be successful•Have fun
•Have friends
![Page 19: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/19.jpg)
Business models for adherence in chronic care
Degree to which behavior change is requiredMinimal Extensive
Mot
ivat
ion
to
adhe
re to
ther
apy
Strong: quickly feel
consequences
Weak: Complications
are deferred
Type I Diabetes
AddictionsType II
Diabetes
Asthma
Congestive
heart
failure ObesityHypertension
Osteoporosis
CancerHIV
Myopia Crohn’s disease
Chronic back pain
Ulcerative colitis
Infertility
![Page 20: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/20.jpg)
6/27/2009 Copyright Clayton M. Christensen 20
Diagnosis Adherence Complications
Rules-Based: Individual doctor can diagnose and prescribe evidence-based therapy
Type I diabetesHypothyroidism Cystic FibrosisHypertension Congestive heart failure HyperlipidemiaOsteoporosisCeliac disease
Business models for chronic care
Diagnosis
Type II DiabetesSchizophrenia Epilepsy Parkinson’s diseaseAsthmaUlcerative colitisChronic Back painAlzheimer’s Disease
Intuitive :Requires coherent solution shop
![Page 21: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/21.jpg)
Business models for ongoing care
Degree to which behavior change is requiredMinimal Extensive
Mot
ivat
ion
to
adhe
re to
ther
apy
Strong: quickly feel
consequences
Weak: Complications
are deferred
Type I Diabetes
AddictionsType II Diabetes
Asthma
Congestive
heart failureObesity
Hypertension
Osteoporosis
CancerHIV
Myopia Crohn’s
disease
Chronic back pain
Ulcerative colitis
Infertility
Doctor’s office
User Networks
Employer- Managed Care
![Page 22: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/22.jpg)
Electronic Medical Records: Organizing Principles
6/27/2009 Copyright Clayton M. Christensen 22
• Must help users do a job that they’re trying to do. Records themselves create no value – they sit on a disk drive instead of in a file drawer.
• Patients and providers need to pull the records into use. If EMRs are pushed upon them they will not be used.
• Data must be open-source, readable by all. Proprietary applications that help patients and providers do the jobs they need to do can then be built upon the data.
• Problems must surface before the problems can be solved. Interoperability problems, in particular, will be resolved only after they are encountered.
![Page 23: The Innovator’s Prescription - Global Health Care, LLCsolution shops (fee for service) Focused value‐added process clinics (fee for outcome) Retail clinics (fee for outcome) User](https://reader033.vdocuments.mx/reader033/viewer/2022053004/5f0820fb7e708231d4207b49/html5/thumbnails/23.jpg)
6/27/2009 Copyright Clayton M. Christensen 23
Specializedsolution shops(fee for service)
Focusedvalue‐added process
clinics (fee foroutcome)
Retail clinics(fee for outcome)
User Networks(fee for membership)
High‐deductibleinsurance & healthsavings accounts
Personal carephysicians
Employer‐negotiatedpricing
Pharmacists
Personalelectronic medical
record
Electronic Medical Records, not an Individual, Must Coordinate Care