Lesson for Healthcare: Disrupt Your Own Business Model Before Someone Does it TO YOU

Healthcare needs positive role models for innovation…and we have a real-time mentor in Netflix.

If you have a Netflix subscription, you probably identify with the company as providing a convenient DVD rental service — order on the web, the DVD arrives by mail, send it back in the handy pre-paid envelope when you’re done.

Today’s ReadWriteWeb describes Netflix’ latest letter to shareholders and explains how the company is preparing for the demise of DVDs:

Through the Lens of Disruptive Innovation: Why Direct is a Hit and PCAST is an Outcast



(click on the graphics to link to original sources)

Regular readers know that I find Professor Clay Christensen’s theory of disruptive innovation to be a useful lens to explain industry evolution. Let’s look at two recent health IT initiatives and see why one is working and the other is stalled.

Six First-Take Reactions to Surescripts Network Expansion

Yesterday Surescripts announced their new Clinical Interoperability Services:

  • Extended Network Connectivity – As a network of networks, Surescripts will support and enable the exchange of all types of clinical messages between EHRs, HIEs and health systems that, today, are not connected with each other.
  • Net2Net Connect – Allows health systems and technology vendors that already support clinical information sharing within their network to connect to Surescripts in order to receive and send clinical information outside their network (December 2010).
  • Message Stream – Secure messaging tools for health systems and technology vendors to enable their physicians to electronically exchange clinical information (December 2010).
  • Clinical Message Portal – Simple connectivity tools intended for providers that, today, do not have an EHR system to send and receive clinical messages. (January 2011).

Many others have recapped the new Surescripts network, so I’ll simply point you to a few of these resources:

Here are my 6 first-take reactions.

The Achilles Heel of ACOs? Shared Savings Payment Model Unlikely to Motivate Hospitals

Sometimes you read something and the full impact doesn’t hit you until hours — perhaps days — later.  As I was out mountain biking today, the importance of something I ran across yesterday suddenly hit me.

Accountable Care Organizations (ACOs) are today’s cure-du-jour for reforming the health care delivery system. Bob Berensen, MD of the Urban Institute strongly questions whether the shared savings model under current legislation provides enough economic incentive for hospitals to disrupt their existing core business of acute, inpatient care.

The dialogue took place at HSC’s 15th Annual Wall Street Comes to Washington Conference. Here’s the conversation from the transcript — I actually went back to dig this out of my trash:

Paul Ginsburg: Actually, let me just pose a devil’s advocate question. You know, I could see why ACOs might be attractive to a large —- an IPA because there’s this opportunity to reduce hospital use and be rewarded for it. But what’s the motivation for a hospital because the rewards from the ACO are likely to not measure up to the loss of volume from more efficient delivery. Is there any response to that?

Is HITECH Working? #7: Where’s Plan B? Congress and ONC need to address major flaws in HITECH.

by Vince Kuraitis JD, MBA and David C. Kibbe MD, MBA

Pop quiz: Among early-stage companies that are successful, what percentage are successful with the initial business model with which they started (Plan A) vs. a secondary business model (Plan B)?

Harvard Business School Professor Clay Christensen studied this issue.  He found that among successful companies, only 7% succeeded with their initial business model, while 93% evolved into a different business model.

So let’s take this finding and reexamine our human nature. In light of these statistics, what makes more sense:

  • Defending Plan A to your dying breath?
  • Assuming Plan A is probably flawed, and anticipating the need for Plan B without getting defensive?

We question many of the assumptions underlying HITECH Plan A. We also want to talk about the need and content for Plan B in a constructive way.

In this essay we’ll discuss:

1) The Need for HITECH Plan B

2) Questioning Assumptions — Issues to Reconsider in Plan B

a) Rewarding Incremental Progress
b) Addressing Root Causes for Non-adoption of EHR Technology
c) Questioning Health Information Exchanges (HIEs) as Building Blocks for the Nationwide Health Information Network (NHIN)
d) Catalyzing Movement Toward Modular EHR Technology
e) Focusing Incentives on High Leverage Physicians
f) Recalibrating Expectations for EHR Technology Adoption
g) Getting Bang-for-the-Buck in Achieving Meaningful Use Objectives
h) Comprehensively Revamping Privacy/Security Laws vs. Tweaking HIPAA
i) Maximizing Sync Between HITECH and PPACA
j) Leveraging Potential for Patient-Driven Disruptive Innovation
k) Promoting EHR Adoption Beyond Hospitals and Physicians, e.g., long-term care, home health, behavioral health, etc.
l) Dumping Certification

3) Summing Up

Is HITECH Working? #5: “Gimme my damn data!” The stage is being set to enable patient-driven disruptive innovation.


by Dave deBronkart (e-PatientDave), Vince Kuraitis, and David C. Kibbe

So far this series has looked at HITECH participation by hospitals (grumbling but in the game) and physicians (wary, on the sidelines), kudos for ONC’s three major policy points, and how HITECH is already moving the needle on the vendor side. Today we’re going to look at the reason the whole system exists: patients.

It’s possible to look at the patients issue from a moral or ethical perspective, or from a business planner’s ecosystem perspective. In this post we’ll simply look at it pragmatically: is our approach going to work? It’s our thesis that although you won’t see it written anywhere, the stage is being set for a kind of disruption that’s in no healthcare book: patient-driven disruptive innovation.

We’ll assert that in all our good thinking, we’ve shined the flashlight at the wrong place. Sure, we all read the book (or parts), and we talk about disruption – within a dysfunctional system.

If you believe a complex system’s actual built-in goals are revealed by its actual behavior, then it’s clear the consumer’s not at the core of healthcare’s feedback loops. What if they were?

We assert that to disrupt within a non-working system is to bark up a pointless tree: even if you win, you haven’t altered what matters. Business planners and policy people who do this will miss the mark. Here’s what we see when we step back and look anew from the consumer’s view:

  1. We’ve been disrupting on the wrong channel.
  2. It’s about the consumer’s appetite.
  3. Patient as platform:
    • Doc Searls was right
    • Lean says data should travel with the “job.”
    • “Nothing about me without me.”
  4. Raw Data Now: Give us the information and the game changes.
  5. HITECH begins to enable patient-driven disruptive innovation.
  6. Let’s see patient-driven disruption. Our data will be the fuel.

Is HITECH Working? #4: While most attention has been focused on demand side incentives (will doctors and hospitals buy EHRs?), the supply (vendor) side of HIT is already transforming.

by Vince Kuraitis JD, MBA and David C. Kibbe MD, MBA

Most of the press coverage and attention to HITECH has been to the “buy” side of the market:  The central question here has been: “Will doctors and hospitals buy and use EHR technology?”

Meanwhile — and much more quietly — the sell (vendor) side of the EHR market is already dramatically different than it was a year ago. We observe change occurring at at least three levels:

  1. HITECH as Policy Change
  2. HITECH as Mindset Change
  3. HITECH as Technology/Business Model Change

Is HITECH Working? 7 Observations Mom Could Understand

“Make everything as simple as possible, but not simpler.” Albert Einstein

by Vince Kuraitis JD, MBA and David C. Kibbe MD, MBA

If you’re like many folks we talk with, you understand the importance of the HITECH Act legislation — yet feel overwhelmed by the complexity and details.

This series of blog posts is for you. We address the question “Is HITECH working?” with seven straightforward observations. We’ve worked hard to boil down the complexity and make it understandable to the casual industry observer.

Is HITECH Working? Summarizing the Seven Observations

Our 7 Observations are:

PR Blunder of the Year: Federation of American Hospitals Says Meaningful Use Should Not Tie to Quality Improvement

These guys really don’t get it, and they need to be called on the carpet, taken to the woodshed, or pick your own favorite cliche.


The Federation of American Hospitals (FAH) sent a letter to Dr. David Blumenthal (National Coordinator for Health IT) arguing that “Meaningful Use” funding should not be tied to achievement of quality measures.  The FAH is the trade association for for-profit hospitals; the letter is dated August 26 and a copy is available on the HealthHombre website, with a deserved hat tip.

First, let me concede that they make a reasonable point on p. 3 when they say “Under it’s framework, the Policy Committee has recommended that HHS should adopt a measure for 2013 requiring a 10 percent reduction in preventable admissions from 2012 to qualify as a meaningful EHR user.”  This measure deserves discussion.

Here’s the implicit threat of a lawsuit — the nuclear bomb: