Healthcare Efficiency

Clayton Christensen invented the term to describe a change that upsets the status quo.  He mentions the personal computer as an example, but there are others.  The Walkman.  And the iPod is not just a better Walkman.  When incremental change just isn’t going to solve the problem, you need to wipe the slate and introduce a new concept.  In an interview in Health Affairs, Christensen says the problem of the uninsured won’t be solved by getting hospitals to “somehow become low cost.”  Rather, he says, we should enable “lower-cost providers and lower-cost venues.”  The key to making this happen safely is to embed the ability to perform the procedure “in the equipment and the procedure.”  LASIK is cited as an example of moving the skill from the surgeon to a machine.  It is also an example of price competition driving costs down dramatically.  

In one sense, ambulatory surgery centers are a disruptive innovation in healthcare.  By focusing on a limited number of operations, process efficiency is possible.  I recently saw a report from an ASC that did eight laparoscopic tubal ligations within four hours and at half the cost of the local hospital.  

In the examples of angioplasties and transistor radios, he makes the point that “It’s a system disrupting a system.”  Just as cardiac surgeons opposed angioplasties and appliance stores didn’t embrace Sony, hospitals opposed ASCs.  The academic-hospital complex is heavily invested in the status quo.  They favor injecting more money into their system by purchasing health insurance for the uninsured, whereas the problem cries out for disruptive innovation.  

He talks about potential savings in operating costs of 65% with the Toyota production system.  “...there are better ways of running those hospitals, and we know how to do it.”  The real problem is incentives.  As long as hospitals are paid to do it poorly, there is no motivation to improve.

What about the MinuteClinic movement?  Will a $39 Wal-mart visit replace the $150 doctor’s office visit?  Time and convenience will favor Wal-mart, but if insurance pays the bill, then it will be a hard sell.  However, if patients are spending their own money via HSAs and high deductible health insurance, then the new system becomes threatening.  It doesn’t take a board certified family practitioner to tell if a sore throat patient needs antibiotics.  However, some complaints and more subtle, and the real trick is recognizing the difference.