The healthcare system in the United States is expensive and riddled with logistical and systemic barriers, all of which add up to a lack of accessibility. A 2020 study found that almost 25% of Americans skipped out on medical care because of the cost. The uninsured rate has grown steadily since 2017, with 10.9% of nonelderly Americans lacking health insurance in 2019. And millions of people live in healthcare deserts, with 16% of residents living at least 30 miles from the nearest hospital, and almost 30 million living over an hour from the closest trauma center.
Knowing this, making healthcare more accessible should be a priority for payers, providers, and policymakers. But all too often in healthcare, there is a focus on innovations that actually add cost to the system. While these types of innovations do play a role in improving healthcare, they continue to make highly specialized care more expensive and do little to expand access to care more broadly. These are what we call sustaining innovations.
Sustaining innovations do not create new markets, and typically raise the price point of existing products, making them less attainable to consumers at the bottom of the market. An example of this in healthcare is robot-assisted surgery. A da Vinci robot, one of the biggest names in robotic surgery, can raise the cost of laparoscopic surgery anywhere between $3,000 and $6,000, yet robotic surgery is heralded as the future of surgery.
Disruptive Innovation
Disruptive innovations are a direct contrast to sustaining innovations. Their aim is not to improve the status quo, but to change it by opening the market to those who have typically struggled to access it.
Disruptive Innovation describes a process by which a product or service initially takes root in simple applications at the bottom of a market—typically by being less expensive and more accessible—and then relentlessly moves upmarket, eventually displacing established competitors.
A successful disruptive innovation requires three elements:
1. An enabling technology
An enabling technology is not just a shiny new creation. Instead, it is a technology that allows a product or service to be more affordable or accessible to a given population. A great example of this in healthcare is telemedicine. Being able to contact a doctor over video chat or text message opens up medical care to millions of people who live in care deserts.
2. An innovative business model
A hallmark of a disruptive innovation is that it doesn’t target high-end consumers. Instead, it targets either nonconsumers (new customers who previously did not buy products or services in a given market) or low-end consumers (the least profitable customers). In order to work, a disruptive innovation needs to be paired with a business model that allows it to effectively target these customers.
3. A coherent value network
Innovators cannot expect a disruptive innovation to take hold in an unsupportive business environment. A coherent value network is one in which suppliers, partners, distributors, and customers are each better off when the disruptive technology prospers.
Taken together, these hallmarks of disruptive innovation expand access to products and services that are normally out of reach for most consumers.
Why does disruptive innovation matter in healthcare?
The lack of access to medical care has nationwide implications. In particular, a lack of primary care not only worsens health outcomes, but drives up healthcare costs as hospitals are required to treat the medical conditions that result from a lack of preventative or primary care. But on a broader scale, a lack of healthcare simply means worse health outcomes. It leads to an unhealthy population, which is devastating enough on its own, but doubly so when there is so much that can be done to prevent poor health outcomes.
However, disruptive innovations are already expanding access to healthcare. Telemedicine was crucial in helping people continue to access necessary healthcare throughout the COVID-19 pandemic. CVS’ MinuteClinic helped pave the way for retail clinics—staffed by nurse practitioners and only addressing a set list of common medical issues—to disrupt traditional primary care. MinuteClinic is now experiencing a trend towards upward, sustaining innovation, with the creation of CVS HealthHubs—an all in one medical center with expanded care services. The groundwork to improve healthcare is there; there simply needs to be more momentum to continue the work.
In an industry as vital yet inaccessible as healthcare, the importance of disruptive innovations can be fairly straightforward. Making healthcare more accessible and affordable opens the door for millions of people, creating a healthier population and lowering the cost of care overall.
