Pioneering Ideas

Overshoots and Apps: Disruptive Innovation and Health IT

As Paul Tarini just discussed, we had a thought-provoking discussion with Clayton Christensen about disruptive innovations and health IT.  One idea that interested me in particular was the potential for electronic health record (EHR) systems that are offered on the Software as a Service (SaaS) model to serve as a disruptive innovation.

Let me back up for a minute. Christensen talked about looking at the pre-conditions for disruptive innovations. One of them is when companies “overshoot” the market in terms of performance. For example, their product adds more and more features (each of which adds value to fewer and fewer customers) and becomes very expensive. They target the high-end of the market, where they make the highest margins, and as a result, they offer more than the lower end needs at a price that the lower end can’t afford. They’re “overshooting” that part of the market. This then creates opportunities for new entrants, with a new approach – that gives them a cost advantage – to make inroads at the low end of the market. The dynamic that follows is what ultimately transforms the market: the incumbent happily cedes the low end of the market because they make higher margins at the upper levels, giving the new entrant some traction. The new entrant then seeks the next rung up in the market, which the incumbent again, gladly cedes so they can focus on their most profitable customers, and so on, until Toyota, which started with cheap subcompacts in the 70s, introduces Lexus and starts taking on Mercedes.

So that got us thinking about the EHR marketplace and especially small practices.  A lot of people experience real cognitive dissonance when they think of a three-doc practice installing a traditional EHR where they install and maintain the hardware and software on site.  Systems designed for larger practices (with dedicated IT support) can be cost-prohibitive for small practices.  Sounds like overshoot to me.  Enter SaaS-based EHRs, which, by offering a very different technical and business model and (presumably) a real cost advantage, ought to be primed to take on the low end of the market, away from which the incumbents might happily walk.

What am I missing here?  Is anyone seeing signs of this happening?  Are there SaaS EHR vendors that look particularly promising?

The other key Christensen concept that came into the discussion is the idea Paul mentioned that customers have “jobs” to do, as opposed to systems they need.  In my mind, “job” relates quite directly to “app,” as in “there’s an app for that.”  (There I go quoting Apple ads again.)  This gets back to my earlier post on EHRs and apps, which I won’t rehash other than to say that adoption of EHRs would likely be enhanced if they offered the apps that help providers do the many jobs they need to get done and that the best way to ensure that is to open up app development to 3rd parties.

Talking Health Care with Clayton Christensen

We met with Clayton Christensen yesterday, the Harvard Business School professor who originated the concept of Disruptive Innovation. He’s been looking at the health care delivery system for some time now, seeking to apply his model of Disruptive Innovation in order to improve care and reduce costs.  That effort culminated in the release earlier this year of The Innovator's Prescription: A Disruptive Solution for Health Care, which he wrote with colleagues Jason Hwang and the late Jerome Grossman. It’s a fascinating read.

 

He’s a superb, thoughtful and gentle speaker.  If you ever have the opportunity to see him speak, take it.

 

We spent the better part of a day with him, so I’ll note only a couple of items that were raised.

 

The nursing shortage: Christensen notes that our training institutions do not have enough capacity to produce a sufficient supply of nurses.  At RWJF, we have been funding work to enhance and expand nursing faculty as a way to address that issue.  He says that in the same way in which many companies have begun to bring management training and development in house, larger integrated systems are beginning to insource the training of medical professionals.

 

Wellness: Christensen says one of the important things you need to understand when thinking about how to improve a product or service is what job the customer wants that product or service to do for them.  He explains this concept by talking about people who “hire” a milkshake for breakfast in the morning.  Understanding what job someone is hiring a milkshake for—and why the milkshake does that job better than a bagel or a bowl of oatmeal—helps you understand how to improve the product.  He suspects that “wellness” may not succeed as a way to organize the business of health care because not enough people want to hire wellness.

 

Disrupting public health:  We asked him about whether something that wasn’t market-based, but which was a public good—specifically, the public health system—could be analyzed and improved using the framework of Disruptive Innovation.  He said he’d never thought about it, but was intrigued by the challenge.

 

We also had a pretty robust conversation with him about health information technology.  Look for a post later from Steve Downs that discusses some aspects of that discussion.

 

Finally, one of our colleagues noted that RWJF sometimes feels like a player in an industry that’s ripe for disruption.  Any thoughts about what might disrupt our “business model” in philanthropy?

Is the country ready for health reform?

Health reform seems to be on everyone’s mind these days – and why not? Our system doesn’t deliver great value overall, it is inequitable, and the economic crisis promises to make it much worse unless we can do something about it.

I came across two views of health reform Sunday – one by David Leonhardt and the other by Janet Rae-Dupree – both in the New York Times. Leonhardt placed health reform in the context of big picture economic strategy over decades; Rae-Dupree brought the lens of disruptive innovation to health reform. Leonhardt singles out health because it is such a daunting fiscal problem, even in the context of the worldwide economic crisis. The future unfinanced obligations under Medicare plus a distinctly inefficient system makes the future price tag of health reform bigger than the estimated bailout. That is not what most people have in mind when they think of health reform – they think of more people having insurance coverage and improving the care people get.

Rae-Dupree applies Clayton Christiansen’s concept of disruptive innovation to health care, drawing on his book The Innovator’s Prescription, and holds out this pathway for getting beyond the current gridlock of inefficiencies. She describes promising examples, some based on emerging scientific discoveries that point the way.

Both views underscore the need for fundamental changes. But I can’t escape the feeling that much of the country isn’t really prepared for the consequences of health reform that would address some of the basic problems with our system. Disruptive innovations replace existing business models, they would change the way care is delivered – when, who, how, where, costs, and perhaps even our very conception of health-improving services. Health reform may have to combine these two views, addressing the looming budget challenge and encouraging disruptive innovations. Figuring out what the country will do about future Medicare obligations may just require a system that fosters the benefits that disruptive innovations can bring. It will certainly test the country’s resolve to improve health through reform at a time when all of us will be called upon to sacrifice.

Opportunities for Disruption? A Forum on Disruptive Innovation in Health Care

The Innosight Institute, the non-profit think tank founded by Harvard B-School Professor Clayton Christensen, put on a conference last week called, A Forum on Disruptive Innovation in Healthcare.

Prof. Christensen developed the theory of disruptive innovation and is currently working on a book on the subject. One of his co-authors is Jason Hwang, MD, MBA, who served as a judge for the Disruptive Innovations competition Pioneer sponsored through Changemakers. Those of us at the meeting were treated to a glimpse of the still-being-drafted book, which was pretty interesting. I’m keen to read the final version.

Elliott Fisher, MD, of Dartmouth Atlas fame, set the stage for the forum by taking us on a flyover of "everything that’s wrong with health care in America." Fisher then presented seven causes, which I thought was a pretty succinct list:

1. There’s a lack of clarity in the US on the aim of health care;
2. There’s inadequate evidence to evaluate the effectiveness of both biologically-targeted interventions and delivery systems. Fisher asserted that the current discussions around comparative effectiveness were not paying nearly enough attention to the effectiveness of different types of delivery systems;
3. There’s a public assumption that more care is better care (Fisher has published results demonstrating that more care can actually lead to poorer outcomes);
4. Medicine is practiced (and taught) in a model of professional autonomy and authority that is outdated;
5. There’s a lack of accountability for capacity, quality and costs;
6. Current quality measures reinforce fragmentation, in that they’re too focused on performance within individual care settings and don’t track quality across the continuum of care; and
7. Payment incentives are flawed.

Wow.

Another big chunk of discussion focused on the development of more precise diagnostic tests, how they will drive the move to personalized medicine and disrupt the current paradigm of “trial and error medicine,” according to speaker Mara Aspinall, former president of Genzyme Genetics, which provides diagnostic services. As example of new precision, Aspinall noted that we can now diagnose 38 different types of leukemia and 50 different types of lymphoma. That increase in diagnostic precision tracks with the increase in five-year survival rates.

Looked at through the lens of Disruptive Innovation, what you see is a technological innovation—increased diagnostic precision—commoditizes expertise. The growing development and use of more precise diagnostics moves us closer to rules-based—and evidence-based—practice.

Pioneer Invites 11 "Disruptive Innovations" Entrants to Apply

The competition on Disruptive Innovations in Health and Health Care was the first time that we intentionally used the Changemakers open-source competition model to scan the field for ideas that the Pioneer Portfolio might wish to invest in directly. Not knowing how the challenge of disruptive innovation would play out using this type of competition model, we were astounded by the response — more than 300 entries — and really impressed by the creativity and quality represented in the mix of innovations proposed.

We're happy to announce that Pioneer staff have completed their review of the full set of entries. We had some spirited discussions about the ideas that flowed through these entries — they stand to really shake up established ways of doing things in health and health care and trigger big gains for consumers. So, while it's taken us some time, we're happy to announce that we have invited 11 entrants to compete for grant funding, if they so choose. Many you will recognize as finalists and winners, while others were included because we were excited about the pioneering approaches they presented.

These entrants will be asked to demonstrate how RWJF funding could be used to further the development of the work represented in their respective Changemakers entries — either through demonstration, scale and/or replication. The total amount of grants made under this phase will not exceed $5 million.

All of us at RWJF continue to be inspired by the ideas and energy contributed to this competition, and we're grateful for the participation of the global community of entrepreneurs who entered, commented or spread the word about it. We'll keep you posted on future funding decisions stemming from the Disruptive Innovations competition.

The 11 entrants invited to compete for RWJF funding are:

Building ARCHeS to Precise Answers, Stronger Decisions…and Better Health

Yesterday, I had the pleasure to publicly announce Pioneer’s largest grant to date: a $15.6 million award that will enable Dr. David Eddy and his team at Archimedes, Inc. to build ARCHeS, a powerful Web-based interface and delivery system that will allow far more health and policy decision-makers to use the Archimedes simulation model. That’s somewhat of a mouthful, so let me break it down a bit to describe why this project is exciting and has potential to transform the way that we make health and health care decisions.

Archimedes

So, what’s Archimedes? Perhaps the best place to start is with the problem it addresses. David Eddy—a rock-climbing heart surgeon turned mathematician and health economist—is a visionary driven to tackle the enormity of what we don’t know in medicine. So much of what guides our actions amounts to little more than enlightened guesswork. Simply put, there have always been far more questions than answers when it comes to providing quality health care.

As a doctor treating patients, a policy maker and, now, a foundation leader, I know this to be true.  Even the best-intentioned, most diligent among us in this field—be they doctors and nurses, health care analysts, researchers or policy officials—are continually frustrated by the gaps in information to guide many of our decisions. All too often, we can’t say with reasonable certainty what treatment…which policy…what mix of approaches… really works.

Mathematical Modeling: SimCity for Health Care

For more than 10 years, David, together with co-founder Dr. Len Schlessinger, has worked to develop Archimedes, a remarkably powerful, detailed and realistic mathematical model of human physiology, diseases and health care systems. It’s unique in many ways—it is the only model of its kind that can simulate pathways down to the cellular level in human physiology and, in turn, predict outcomes at the population level. By plugging questions into Archimedes, health care organizations and policy leaders can determine, reliably and quickly, the health and economic outcomes of specific interventions and treatments for patients, providers and payers.

As David states it, “We would never build a skyscraper, bridge or airplane without using models to optimize their designs and ensure their structural integrity. Yet today, that is what health care providers and administrators are forced to do with patient care, resource planning and other critical health care decisions.”

Unraveling the Health Care Hairball: A Health 2.0 Conference Recap

I've heard the state of health care described in many compelling yet disheartening ways: broken, expensive, inconsistent, complicated. But today I like this one best: health care is a hairball.

Although Google suggests others coined the phrase before last Thursday, I credit Wayne Gattinella, CEO of WebMD, for introducing it to me and many of the 500 others attending Health 2.0: User-Generated Healthcare in San Francisco last Thursday. For all of us who hope the tools of the social Web might play a role in untangling health care's many problems, now we know what we're up against.

Health 2.0 was the brainchild of Matthew Holt of The Health Care Blog and Indu Subaiya, MD of Etude Scientific, and they delivered a conference with many thought-provoking product demonstrations (and yes, a product launch or two) and much food for thought.

Many bloggers covered the play-by-play better than I can, and I will mention a few, as well as posts by participants, after the jump. If I missed any, please e-mail me at eculbertson (at) rwjf (dot) org so I can add them. But here are a few of my observations and questions about how health 2.0 might affect patients and consumers:

Congratulations to the Disruptive Innovations Winners

You voted, and your top three entries in the RWJF/Changemakers competition, "Disruptive Innovations in Health and Health Care: Solutions People Want," are .......

• Project Echo: Knowledge Networks for the Treatment of Complex Diseases in Remote, Rural, Underserved Communities, University of New Mexico Health Sciences Center (Albuquerque, NM) – Project ECHO (Extension for Community Healthcare Outcomes) teams up an academic medical center with a network of rural health clinics, the New Mexico Public Health Service and the state Department of Corrections to deliver health care to patients residing in underserved areas who have common, chronic diseases. The key component is a disruptive innovation called a Knowledge Network, through which the expertise of a single specialist is shared with several primary health care providers, each of whom sees numerous patients. Telemedicine and Internet connections enable specialists in the program to co-manage patients with complex diseases using best practice protocols, case-based knowledge networks and learning loops.

• Family Coaching Clinics, UCLA Semel Institute Global Center for Children and Families (Los Angeles, CA) – The Family Coaching Clinics offer a new model of preventive mental health for children and families. Located in retail centers and focused on a variety of specific child-rearing issues, the clinics reach families who might never seek out traditional counseling services or might not do so until crises arise. The clinics provide coaching designed to give families the tools they need to resolve common challenges before they develop in to serious problems, by changing family behaviors in ways that have been proven to be effective.

• Instant Birth Control, Planned Parenthood of the Columbia/Willamette (Portland, OR) – Instant Birth Control provides women in Oregon and Washington online access to hormonal contraception such as birth control pills. Instant Birth Control patients receive all necessary health screening and monitoring to assure safe quality care. By providing access to contraception services online, Instant Birth Control empowers women to take charge of their reproductive health by providing access to primary care 24/7, in the privacy of their home. Because they can avoid taking time off from work, school or family commitments, as well as travel and waiting time to see doctors in person, patients can manage their contraceptive and sexual health care in ways that are far more convenient for their schedules.

Descriptions of all finalists' innovations are on the Pioneer site. 

One more day to vote!

The voting period closes at the end of Wednesday for the Disruptive Innovations in Health and Health Care competition.  The nine finalists, selected from more than 300 entries, are listed here, which is also where you can vote once you complete the quick Changemakers registration process.  We want to know which projects you think hold truly disruptive potential - cast your vote today (...and no later than tomorrow)!

And sincere thanks for participating in this competition - it has been amazing to see the quality and diversity of the entries submitted, not to mention the more than 700 comments that folks around the world have logged on the competition site.  They reflect incredible vision and passion in transforming the health and health care marketplace in ways that put consumers needs -- and the jobs they want done -- first. 

Congrats to the winners you ultimately select!

Disruptive Innovations Competition: Time to Vote!

The finalists for the Disruptive Innovations competition have been posted on the Changemakers site. Please take a minute to check out the finalists, and take a few more minutes to vote.

I had the opportunity to be a fly on the wall during the judges' deliberations to select these finalists.  While I can't reveal who said what about which project, I did want to share some thoughts about the judging for this competition.  You can share your thoughts on the competition and on the finalists here.

First, there are some incredibly cool ideas out there!  The competition drew in over 300 submissions and many were engaging proposals.  In the finalist group, there were some "far out" ideas, in terms of technology, behavior change, policy, and more.  I'm hopeful that some of these out-of-the-box ideas can become more common place, and displace the ideas that keep us in a rut of poor (or mediocre, at best) health.  I've been involved with many proposal selection panels, and there's a reason why some of them have elaborate coffee bars—to keep the reviewers awake!  But there was no caffeine at this judging panel.  I think you'll enjoy reviewing the crème de la crème of the competition during the voting phase.

The voting phase for a Changemakers' competition allows the community to be informed, engaged, and heard. Even though we're not part of the judging panel, we can support proposals we think are strong ideas with promising impacts. And, in truth, it is the community of social entrepreneurs, health providers, consumers, etc., who are the real authorities and in the best position to judge what's a disruptive innovation.

The last point I'd like to share about the judging for the competition is the continued dialogue and potential to refine an entry. After an entry is posted to the competition, the Changemakers community can comment on, or ask questions about, an entry. As the judges reviewed and discussed the top selections, more questions came up. In a typical review process, if a question cannot be answered by another judge, it remains unanswered. And, more importantly, the issue isn’t addressed. With a Changemakers competition, the applicant has an opportunity to respond to the questions of the community and of the judges. The answers can help to refine and strengthen an entry, which, in the end, improves the quality of the entry.

Again, please visit the site and vote - become part of the discussion!