“The Innovator’s Prescription”: Christensen’s Book Offers Insightful Dx, Unrealistic Rx

by Vince Kuraitis and David C. Kibbe MD, MBA

Being big fans of Clay Christensen and his theory of disruptive innovation (DI), we have been awaiting his just-released book The Innovator’s Prescription: A Disruptive Solution for Healthcare .  The book is co-authored by Dr. Jerome Grossman and Dr. Jason Hwang.

We have mixed reactions.

The book is mistitled. It should have been titled "The Innovator’s Diagnosis". The book does a fantastic job at diagnosis (Dx) of problems in the U.S. health care system. It presents many new, innovative analytical frameworks and lenses through which to view the U.S. health system.

However, it’s weak on prescription (Rx): many of the proposed solutions are speculative, ungrounded, and/or defy political reality.

We understand that the very nature of disruptive innovation implies inevitable resistance from organizations that benefit economically from the status quo. But at some point a proposed solution becomes so disruptive that you have to suspend reality to believe that it could be adopted or implemented — and many proposed solutions in this book enter that realm.

The book applies Christensen’s general theory of DI specifically to the health care system. It addresses questions such as:

• What is DI?
• Why is it important to create an environment in health care where DI can flourish?
• How can we create the right environment in health care for DI to flourish?

The introductory chapter of the book is available here at no charge (right column under Downloads). It’s a great overview.

Dx on Target

The authors present many insightful ways to analyze and understand the dysfunction of the U.S. health care system. A few that we found particularly useful include:

• Describing the two major enablers of disruptive opportunities in health care — 1) technologies enabling less skilled individuals to do tasks that previously required specialized expertise, and 2) business models allowing care to move from centralized locations (hospitals and doctors offices) to distributed environments (home, work and community).  See slide 8 here for a helpful visual presentation.
• Explaining the critical role of standardized personal electronic health records
• Introducing a new terminology around intuitive medicine, empirical medicine, and precision medicine
• Describing three key elements for DI: technological enabler, business model innovation, and value network
• Explaining in detail the need for systemic integration in health care
• Describing the type of medical practice required to diagnose and treat a range of chronic diseases

…and many, many others

Rx Misses the Mark

Christensen has been on the road talking about this book since January 2008. Unfortunately, the book reads as if it were released then (January 2008) even though the book was made available in December 2008 and the publication year is 2009.

There is no mention of economic events of the past year or the national political context in which health care finds itself today. There is no mention of the 2008 election, that Obama and the Democrats won the election handily, that Wall Street and credit markets have self-destructed in past months, and that health care reform appears likely to be a front-center legislative target for 2009.

To be fair, the book does not portend to provide advice in context for today’s health care political reality. That said, we think not speaking to today’s political context is a missed opportunity.

In many sections of the book, the authors are extremely sensitive to political and historical context; there’s a 10 page discussion of the history of health insurance markets over the past 100 years.

However, in light of the current importance and visibility of health care as a national reform issue, the authors miss a major opportunity to provide timely advice…and as we’ll discuss below some of the advice they do provide is completely out of sync with a coalescing Democratic vision for reform. With a little tweaking and updating, this book could have provided invaluable advice to the Obama health reform team.

Much (not all) of the Rx provided in the book is not based in reality. The recommended Rx — even when intellectually persuasive — is short on details and sometimes politically infeasible. We’ll briefly discuss three examples relating to physicians, hospitals, and insurance reform.

1) Disrupting the Business Model of the Physician’s Practice . Christensen’s provocative and unique Dx is that the typical primary care physician’s business consists of four different categories of health care.

His Rx is to break out the discrete tasks of primary care:

1. Rules based precision medicine should be done by nurse practitioners and physician extenders practicing in retail clinics
2. Oversight of chronic disease should be handed to networks of professionals who assist in disease management (e.g., Healthways)
3. Wellness examinations will remain in the province of primary care physicians
4. Primary care physicians should focus on disrupting specialists in the practice of intuitive medicine. This is "propelled by technology that enables economical on-site testing and imaging, and online diagnostic road maps that integrate large bodies of research to bring more and more diagnostic capabilities to primary care physicians." [p. 114]

What about the medical home model around which primary care physicians have been coalescing over the past four years? The authors discuss and dismiss the medical home model all in one paragraph:

Still others have encouraged the notion of a patient-centered medical home…. We have concluded, however, that assigning this role to an independent primary care physician’s practice is a bad choice. It forces those practices into comingling business models…[p. 129]

Physicians have worked hard to develop strong political acceptance of the medical home among employers and on both sides of the Congressional aisle. The medical home in some form is almost certain to be part of national reform efforts. For example, the recently released Baucus reform plan mentions the term "medical home" a total of 29 times.

After reading the book, do we believe physicians, legislators, and employers will say: "Now we get it. The medical home is 180 degrees from where we need to be headed. Let’s shift course immediately."

Not going to happen.

And as to the Rx for chronic disease, did anybody on the team notice that the disease management (DM) business model has imploded in the past year? The book references Healthways DM approach as a favored solution to the primary care problem and the chronic disease problem; however, there’s no mention or discussion of the fact that the company’s stock has fallen from $67 last January to $11 today. Rightly or wrongly, Medicare seems to have concluded that DM doesn’t work, and has refocused its effort on the medical home model.

As regular readers of this blog know, the issues around the medical home and chronic disease management are complex.  We’ll continue to explore them further in future postings.

2) Disrupting the Hospital Business Model . Christen insightfully provides the Dx that today’s hospitals are really two inherently conflicting business models trapped in one organization:

When the same hospital seeks to fulfill these two very different value propositions, the consequent mandate for two types of business models creates extraordinary internal incoherence. The resources and the essential nature of the processes inherent in the two business models are different. So are their profit formulas. Solution shops need to get paid on a fee-for-service basis. Their fees cannot be based on outcomes, because many factors beyond the accuracy of the diagnosis affect the results. In contrast, value-adding process business can routinely sell their outputs for a fixed price, and they can guarantee their results.

What’s the recommended Rx?

Hospitals need to deconstruct their activities operationally into the two different business models: solution shops and value-adding process activities.

While Christensen acknowledges that "achieving these disruptive changes to our hospital system will be extraordinarily complicated", the book is short on specifics. Just how are we going to bell this cat?

3) Disrupting the Reimbursement System . Using a "jobs-to-be-done" approach, Christensen’s again insightful Dx is that the multiple roles that health insurance has to play are complex and often conflicting.

The centerpiece of Christensen’s proposed Rx is Health Savings Accounts (HSAs) combined with High Deductible Insurance (HDI). We both believe that the HSA/HDI option has merit and could be one element of a reformed health system. It’s unfortunate that the HSA/HDI option has become politically divisive.

The HSA/HDI prescription is a political non-starter in January 2009. The HSA/HDI option was the primary thrust of George Bush’s health reform efforts. Recommending this approach to Obama planners will fall on deaf ears and lower the overall credibility of the book.

Would We Recommend the Book?

Yes. Despite our reservations about the Rx, we strongly recommend the book. The ideas are powerful and the framework is based on a broad perspective and insightful analysis of how change has occurred in other industries.

Is the book half empty or half full? We prefer to look at it as half full — a great start to the debate and dialogue that needs to occur around creating the right environment for disruptive innovation in health care.