The Innovator's Prescription: A Disruptive Solution for Health Care 1st Edition

This is not a totally adequate summary of a comprehensive and important book, “The Innovator’s Prescription”. I hesitate to call this a “review” because I am not a qualified judge. However, when the book was released in 2009 there was universal acclaim from medical, political, and corporate healthcare company leaders, sadly that led to no outcomes. Despite 5 years passed, few of the ‘prescriptions’ (and none of the problem framings) are out-of-date. The messages are still relevant. In short, the experts have recognized its worthClayton Christensen is celebrated for analyses on innovation (disclosure: read 3 previous books). Prior and during the study that produced this book, Christensen was stricken with 3 life threatening illnesses in succession, affording him first hand experience with big medicine. These illnesses provided first hand insights for the 10 year study with MD collaborators: distinguished internist Jerry Grossman … director of the public health program at the Kennedy School, CEO of Tufts medical Center in Boston, and chair of Boston Federal Reserve (also founded Medical Information Technology and 3 other companies) … and Jason Hwang, an MD/MBA turned consultant.This book is not light reading. What I've written is my interpretation (until tiring of trying to capture it all). The material is complex although many of the book’s observations of problems are obvious once pointed out, others easy to spot if I would have exited the patient role and viewed through my business lens. Some analyses are highly original and brilliant, others appear complex from which to operationalize a solution.Christensen saw the Boston medical system (arguably a best) that was ripe for improvement through 'disruptive innovation'. His approach was application of simple business model theory … value proposition, description of resources, business processes, and profitability formula that describes how to make money. Other forces for a change agenda are technology and networks. Christensen exposes and explains the problems with current healthcare that cause it to be less effective, inefficient, and costly. Throughout the book and especially in final chapters, he offers how these problems could be addressed. Unfortunately, the task of fixing is daunting (more on this) because ‘the system’, same as for a company business model, creates an environment and static reality of structural self preservation, including the power structure. This is the same syndrome that prevents large companies from creating new businesses that rely on significantly different business models (see challenges in HBR “Corporate Venturing”). Few large companies have been successful. Those who have isolated the venture or operate as a group of ventures. Arguably the current federal system of government is failing for similar reasons - wrong ‘business model’, unable to adapt, unable to change. Throughout the book there are many corporate examples as analogies, mostly failures. I will not mention these, too many or maybe I’ve just read too many.In my view a headline issue with how the national healthcare dilemma has been framed is “pricing”, everyone talking about “prices” (this book caused me to see this). The focus on “pricing” instead of "delivery" - improving the efficiency and effectiveness of delivery - obscures the problem and is a distraction to the solution. Christensen identifies the flaw with healthcare delivery as not matching the right business model to the right business. Specifically, “delivery” by healthcare institutions is not tailored or matched to the ‘business’ or need. If effective delivery is front and center with the right model, market forces brought into play, “pricing” will take care of itself (Christensen doesn’t say this; my conclusion). Instead of the questions - “can we afford it?” and “what costs should be reduced, how, how much?” - a shift to the value chain lens and engineering the delivery processes (same as companies in mid 1990’s) provides a path to desired end states (solutions). Finally, a serious problem with no clear answer is “who will do this?”, “who can and will take the lead?".Delivery - Hospitals & Medical ProfessionalsThe typical large hospital is staffed and equipped to handle anyone, any time, with any problem. This becomes the problem because the structure (with costs) are too large for many/most ‘customers’ who don’t need this massive capability. The institution that houses a proton therapy device and fMRI, lavishly staffed with highly educated and trained specialists, is unneeded to set a broken bone or to administer treatment for a known chronic illness following a prescribed therapy. Some hospitals are even set up to treat ‘by organ’ (w/ multi specialists not conferring) - doesn’t make sense for a problem with an unknown cause. Toward the end of the book Christensen describes how “lean” development and manufacturing methods could lend significant specific improvement to delivery (“lean” is about process flow and waste removal … see Allen Ward’s book or others).Christensen segregates 3 types of delivery needs: unique diseases requiring diagnosis, needing a 'solution shop’; 1 time treatments/operations; ongoing care of chronic diseases that are understood and can be controlled. A deficiency is the teams addressing all of these is typically housed together, typically one organization, burdening each team with unneeded resources and infrastructure. A corresponding situation exists extending to medical professionals with over qualified specialists treating known problems. There are no obvious cases cases in corporate technology organizations with a similar mismatch of capabilities and projects.The book suggests disease/ailments can be segregated into those not understood at all (categorized through symptoms … a significant problem on the drug side since FDA classifies diseases by symptom as opposed to cause), diseases partially understood and treated by ‘intuitive medicine’, diseases understood and able to be managed by current technology (many chronic diseases fall in this category), one time medical problems. Over application of resources is the driver of excess costs. Example … A board certified ENT specialist is not required to examine and treat an ear ache that could be handled by a nurse practitioner. An ear ache does not need to be treated in a hospital or comprehensive clinic, could be handled in a ‘store front’ with other common ailments.Conversely, there is merit in establishing ‘solution shops’ for large, difficult diseases … e.g. MD Anderson, Texas Heart Institute ... dedicated to addressing particular medical problems, not burdened with addressing all. A useful observation re ‘solution shops’ is the benefit of multi-specialist teams (Jewish Hospital in Denver was a pioneer). Typically and unlike multi-discipline technical teams in industry, medical specialists often don’t confer with one another; the patient travels from one to the next. This is changing as large institutions such as the Cleveland Clinic assign diverse solution teams to poorly understood medical problems.TechnologyAn issue with technology that comes out in the book is “knowledge" (extends to the education issue). Entering medical students have a diversity of science backgrounds with instruction pitched at a low level with considerable remedial teaching or ‘reteaching'. There is a need both to improve the science education base and to insure that technology is deployed at the proper (lowest) level within all levels of care. “Technology” implies access to expert systems, data, pushing technology downward (e.g. work done traditionally by radiologists to users), broadly accessible and digestible patient records, with networks of care providers sharing latest information (happening for cancer, other?).EducationBasic medical school is 2 years classroom (‘science’) following by 2 years of clinical practice. Two problems: the ‘science’ is science ‘light', and after 2 years when ‘clinical practice’ starts, many have forgotten from the classroom. What is needed is something similar to engineering curricula wherein the classroom is connected to the lab - simulations, projects, real time doing. In medical school the issue is worse because if the student learns of something in the classroom and never sees it in the clinic (timing issue), they develop no usable experience and have no capability to deal with it. Last, there is a need for stratification to align education, capabilities and service mission - researchers, specialists, primary care, nurse practitioners. This is obviously missing in the fee for service system.ReimbursementA large overhead to the current system is “insurance" companies. “Insurance” is not really insurance because there is little risk (insurance is payment of a premium for a guarantee of compensation for loss). Medical insurance companies have become paid administrators for handling paperwork with nice returns. Ironically, they also serve the function of being "the market”. The insured pay for company administration costs and profit. This process also serves (with Medicare) to trap the medical system into a fee for service model instead of fee for results.The fee for service model drives business arrangements between corporations and insurance companies, between insurance companies and hospitals/doctors, between insurance companies and device companies/pharma suppliers, and chronic care providers. Viewed in entirety, these are crony relationships that preserve a return for everyone along the daisy chain, and the 'big dog’ is Medicare/Medicaid setting the floor and preserving fee for service. Medicare is a ‘crazy' institution, outsourcing higher value work off its books, defining 155,000 health codes, choosing which medical specialists provide the most valuable services and setting pricing per service without economic evidence (Medicare admitted they lack sufficient data to support pricing, have no supporting cost data, only the determinations decided by a chosen group of doctors), and paying little/nothing to doctors seeing patients and keeping them well. This observation offers a prospective solution - a ‘capitation’ system that rewards for keeping people well.A second easy target is there are too many without ‘skin in the game’. The book advocates health savings accounts, providing money to spend as prudent. But it also mentions the disparity in tax treatment with deductions for insurance. These obvious flaws need correction.In ranking health systems based on desired goals fee for service ranks last. A national health system looks better, but only if the manager is not incompetent (how’s this working so far? how about other federal systems?). There are compelling arguments that integrated capitation systems with health savings accounts could work best among those proposed. Not emphasized enough (in my view) is any major change initiative creates winners and losers. In this case the losers have considerable political and economic power.Drugs and Medical DevicesChristensen paints a dismal future for the pharmaceutical industry as part of the solution. First, the industry is stuck with a big company business model. And big pharma is tied to delivering chemistry (and/or bio molecules) with a cost plus formula akin to defense contracts with the U.S., subsidizing drug development for the world, making up for cheap foreign sales with high U.S. pricing. This is exacerbated by an FDA that defines disease by symptom, seldom linked to cause, locking in a drug to symptom treatment and restricting drugs being used for other maladies (even if they works) without a clinical trial. Since clinical trials are big bucks, aligning drugs to symptoms doesn’t help costs or knowledge. So drug developers milk incremental improvements for patent extensions and market advantages leading to short term returns. All this is abetted by the FDA approved clinical trial system and the large company’s massive overhead and admin burden (book proposes simpler clinical trial system). Big pharma isn’t geared to be able to deliver targeted therapies linked to genetics and molecular biology - too small. They’re stuck in symptoms, large clinical trials without root understanding of why many drugs work and or don’t work (not shifted from intuitive medicine). Diagnostics is highlighted as helping to bridge the gap but it is under rewarded in the fee for service model and under capitalized ("New Scientist” continues to run encouraging reports).The issue around medical devices is rooted to better application of physical sciences and engineering. Devices commoditizing medical treatments and the pace of commoditization is being retarded by ‘institutions’ and resisting professionals because of the erosion of returns and perceived loss of professional value. It will be interesting to see if this changes as 3D printing of organs and molecular biology treatment methods progress and reach commercialization.I’ll stop. I’ve probably written more than I learned and did a bit of disservice to the prescription side. Not wanting to recycle through the text, I didn’t go back to pick what I didn’t remember. For this, I apologize to those who read this.I believe everyone should be aware there are better ideas for the healthcare system. The old healthcare system wasn’t working well, costs and coverage. The new system insures more people but is burdened with the same delivery and reimbursement mechanisms with higher costs, and creates more problems than it solves. Don't look for the prescriptions from this book in the Affordable Healthcare Act. Special interests have delivered a horse designed by committee … a camel.

I (St. Paul) have become all things to all people, so that I might by any means save some. I do it all for the sake of the gospel, so that I may share in its blessings. - 1 Corinthians 9:23Willingness to be all things to all people may be a good strategy for spreading the Gospel, but it doesn't work in business including the business of health care. At least that is the way I would summarize the basic message of The Innovator's Prescription by Clayton Christensen, Harvard Business School Professor. It's a message that rings true with me based on personal experience in a company struggling with management of both specialty and commodity businesses. Christensen's focus is on disruptor-driven innovation, and he has applied the same theories to education reform in Disrupting Class.Words analogous to those of St. Paul quoted above could well be uttered by general hospital managements and physician practices who would say something like this:To those with serious life threatening injuries, we have become a trauma center so that we might save their lives. To those with bad colds, we have become a dispenser of aspirin and advice. To those with terminal illnesses, we have become very expensive anti-hospices doing whatever we can to prolong life. To those with chronic illnesses we have become providers of routine and ordinary treatments at high cost and great inconvenience. To those with undiagnosed illnesses we have become expensive providers of trial and error testing to try to figure out what is wrong. To those needing operations, we have become a surgery center. We do it all for the sake of health care so that we may share in the revenues available from it.The problem with that lack of focus is that it assures a high cost structure and impossibility of providing such services efficiently or for charging appropriate and fair prices for them. Christiansen argues that there are three basic tasks to be provided to customers of the health care system and that the three are so different in nature that it is impossible for a single integrated institution to provide all three efficiently and effectively. In lay terms, I would say the three basic tasks are:1. Diagnosis and problem solving2. Application of standard one-time treatment based on the diagnosis3. Ongoing management of chronic diseasesThe first task requires the best specialized education and technology and is most expensive and can be paid for only with a fee for service system. Probably most people never need such service. The second task is process oriented and can be standardized with written procedures describing best practices. Such standardization will allow primary care physicians to displace specialists and nurse practitioners to displace primary care physicians for many tasks thus increasing availability and reducing cost and time required. Pay can be based on results. The third task is best managed by facilitated networks of persons with the same diseases to enable sharing of best practices and improve communication and access while reducing costs. Pay can be based on participation.Christensen discusses the normal business development cycle that begins with evolution of vertically and horizontally integrated companies at the front end followed by a process of dis-integration as those big companies gradually outsource the least value adding parts of the business to smaller companies. All the steps in that process make economic sense for the large company giving up something, for the small company gaining something, and for the customer getting a better deal in cost and quality. This cycle is playing out in small ways in the health care industry such as in development of independent surgery centers and nurse practitioner staffed retail clinics but is severely slowed and restricted by the government imposed system of fixed reimbursement for procedures. Physician practices and general hospitals are helpless to change the system because they are trapped in it and dependent on it. Rapid change must come from external disruptors.He also discusses a normal technology development cycle which begins with everybody having to go to experts to access a new technology and proceeds to wide dispersion of and easy access to the technology even for novices. A medical example cited is Dialysis, which is now so simple that it can be done at home more effectively and at lower cost but normally is not because congress guarantees Medicare reimbursement for clinical dialysis for anyone suffering from end stage renal failure.This is a rich text, full of examples from medical and non-medical businesses, to which I cannot do justice in a post of a few hundred words. For any who believe that a government single payer system is the best approach for US health care, this text will explain clearly why smart people who have spent years studying the system think otherwise.I offer this quote from near the end of the text:We hope, however, that the concepts in this book can give government officials a language and a deeper understanding of how the world works, so they can sort self-serving arguments from public-serving ones. In particular, we hope we've provided convincing theory and evidence that the solutions cannot come simply from demanding that existing providers operate more efficiently or compete against each other more intensely...The health-care industry needs to be disrupted.Now, if government officials would only read the book...as soon as they get through reading the self-serving argument based 2000+ page bill that they are about to pass and try to implement.