America spends the most on care for some of the worst population health in the developed world. And one way or another everyone suffers for it, in terms of physical and emotional pain, or lost opportunity and prosperity.
Many industry reformers believe the solution to this crisis lies in allocating more healthcare decisions and costs to consumers, on the assumption this will inevitably lead to better, more accessible and affordable healthcare. But while consumer demand for such care can create helpful competitive pressure for providers to deliver it, it can’t create the insight and capability to do so. Only innovation can. Specifically, Disruptive Innovation designed to help individuals live the longest, healthiest lives possible, given their unique circumstances.
Disruptive Innovation is the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost have become the status quo—eventually completely redefining the industry. It has played out in markets for everything from home entertainment to teeth whitening; and it can make healthcare delivery more effective by making providers’ care processes, as well as individuals’ own self-care regimes, easier and less costly. This, in turn, reduces the need for both more, and more expensive, interventions over time.
Unfortunately, disruption has been slow to emerge in the sector. As Professor Christensen, Andrew Waldeck and I point out in our recent paper, it has been thwarted by the broader healthcare industry’s unique structure, which effectively prioritizes the needs of commercial insurers and large employers–the institutions that pay the most for consumers’ care–over those of healthcare consumers. The industry structure also stacks the deck against disruptive entrepreneurs, with professional licensing requirements, and access to patients and key delivery partners, controlled by incumbent providers and insurers.
Consequently, most innovation in recent decades has been sustaining to the industry, rather than disruptive. Since 2000, for instance, venture capitalists have poured more than $200 billion into healthcare. The vast majority of that investment went into biotech, pharma and devices–sectors whose solutions typically make healthcare more sophisticated and expensive.
However, conditions are improving for disruption in healthcare delivery. Vanishing margins, intensifying pressure from payers to maximize care value rather than volume, and consumer demand for health and wellness solutions that the system doesn’t provide have increased both the incentive and reward for disruptive models.
As a result, more and more innovators are attacking the status quo. Some of the most exciting new models employ multidisciplinary care teams, often coupled with health coaches and/or increasingly sophisticated data insights, to understand the unique circumstances of patients’ lives, develop care plans they have the capacity to embrace, and support them throughout their health management journeys. Providers like ChenMed, Oak Street Health, WellMed, and Aledade are gaining traction with such disruptive models, as is Iora Health, which we profiled in this blog.
The road ahead for these and other innovators in healthcare delivery remains challenging, given regulatory uncertainty and the significant financial risk of investing in value-based models in an industry that still largely rewards transaction volume. But with a legacy model that’s now failing all of its stakeholders, there’s no turning back. Innovators who can create new disruptive models for healthcare delivery will not only position their organizations for success and sustainability. They’ll also help put America back on the path toward health and prosperity.
For more, see:
How disruption can finally revolutionize healthcare
