I seem to hear the word disruption everywhere these days, often in conjunction
with a new gizmo or a new piece of software. But I also hear the word in conjunction with
medicine as in “we are going to disrupt health care by…” Since it is often used in a business
context, I decided to look into the origin of the concept and found a nice review written in
2015. 1 Even then the authors noted exponential growth in both use and misuse of the
concept. From their perspective “the problem with conflating a disruptive innovation with
any breakthrough that changes an industry’s competitive patterns is that different types of
innovation require different strategic approaches.” To them, “disruptive innovations
originate in low-end or new-market footholds.” The authors also point out that disruption
is a process that can take a long time, but often uses new business models that are different
from the incumbents. Not all succeed.
Consider what happened when three large businesses, Berkshire Hathaway,
Amazon, and J. P. Morgan Chase decided they had a better business model for medical
care—one that was convenient and affordable. I don’t know how much money was
invested, but the effort folded after three years. 2 “The move to shutter Haven may be a sign
of how difficult it is to radically improve American health care, a complicated and
entrenched system of doctors, insurers, drugmakers and middlemen that costs the country
$3.5 trillion every year.”
Now the weakness being “attacked” are real—primary care is not readily available
in most areas, or involves inconvenient waiting, and is expensive. But if done correctly, it is
both profitable and valuable. It is worth noting the institutional powers—insurers, health
systems, and drug companies—focus on the high dollar technical care and usually see
primary care as a feeder system which is largely captive, as few physicians can make truly
independent judgments about who should have a patient referred to them when help is
needed. And the rise of large organizations has been disruptive to individual practitioners
as documented recently by Holtz. 3 Concern about the pernicious effects of corporatizations
has even spurred a call to renew and revive laws prohibiting the corporate practice of
While all of this may or may not be good business, it has not helped with the
problem of medical debt. Current estimates are that 18% of U. S. households have overdue
medical debt amounting to a mean of $21,687, or nearly $2,000 per capita. 5 “The strongest
predictors of incurring medical debt are being sick or needing care…Lacunae in
coverage—copays, deductibles, uncovered services, and network limitations—that have
become common in insurance plans drive most medical debt.” The authors note “unpaid
bills weigh heavily on patients, but uncompensated care is less burdensome for most
1 Christensen CM, Raynor ME, McDonald R. What is Disruptive Innovation? HBR December 2015. Accessed 15
September 2023 at https://hbr.org./2015/12/what-is-disruptive-innovation
2 CNBC, 4 January 2021. https://www.cnbc.com/2021/01/04/haven-the-amazon-berkshire-jpmorgan-
venture-to-disrupt-healthcare-is-disbanding-after-3-years.html. Accessed 17 September 2023.
3 Holtz H. A Shared Mission. N. Engl J Med 2023(Sep 14);389:971-973. doi:10.1056/NEJMp2305237.
4 Zhu JM, Rooke-Ley H, Fuse Brown, E. A Doctrine in Name Only—Strengthening Prohibitions Against the
Corporate Practice of Medicine. N Engl J Med 2023(Sep14);389:965-968. doi:10.1056/NEJMp2306904.
5 Uppal N, Woolhandler S, Himmelstein DU. Alleviating Medical Debt in the United States. N Engl J Med
2023(Sep 7);389:871-873. doi:10.1056/NEJMp2306942.
hospitals. A KFF…analysis showed that charity care represented 1.4% or less of operating
expenses at half of US hospitals in 2020, and ‘uncompensated care’…total $42.7 billion, or
only approximately 4.0% of hospitals’ operating expenses, according to the American
Hospital Association. Their conclusion? “The persistence of medical debt and low levels of
charity care at non-profit hospitals despite the ACA’s financial assistance mandate indicate
that more muscular policies are needed.”
Another hot-button issue is the cost of prescription drugs. In an editorial this month
in the Annals of Internal Medicine, the writers begin by stating: “The pricing of US
prescription drugs is complex.” 6 They lay out succinctly the Byzantine methods used, which
guarantee profits to the manufacturer, the pharmacy benefits manager, and sometimes the
insurance company, but leave even insured patients stuck with large out-of-pocket
expenses. Their conclusion? “Reforming the current opaque and rebate-based pricing
structure of the U. S. pharmaceutical market should benefit patients by protecting them
from cost-shifting; improving medication affordability, treatment adherence, and health
outcomes; and reducing preventable downstream health care spending and use.”
The editorial accompanies an article in the same issue looking at the availability of
cardiovascular medications in 19 plans offering generic medications only as of March-April
2023. 7 The study is complex as they evaluated each plan on breadth of coverage, choice,
evidence-based choices, and multiple dosages to allow for titration. Their key findings
include medications for treating hypertension and hyperlipidemia had better coverage
than those used for treating heart failure and atrial fibrillation. None included DOAC’s for
which no generics are available. Their conclusion? A single program for a given patient may
not exist. “It is important to perceive individualism among [programs] not as a limitation
but rather as a way to create choice and health competition.” The problem with this
conclusion, of course, is the prescriber has neither the time nor the data to do this kind of
uncompensated brokering, and many of the patients and families may not be able to do it
So, for all the talk about disruptive innovation in health care, the net effect thus far
seems to be the businesses get richer, the patients get less for more and with marked
increases in hassles and more out-of-pocket expenses. I started out discussing the features
of disruptive innovation, which often include a new business model. Maybe that is what we
need, but it is hard to do with health care amounting to nearly a fifth of GDP in the richest
economy in the world. Not to mention we still need to care for the sick and the hurt while
we re-engineer the process. Paying for “value” does not seem to be working and making the
patient the center of the enterprise seems unlikely to outrank minding the money. Anyone
have another idea?
17 September 2023
6 Socal MP, Bai G. Insulins and the Evolving Landscape of U. S. Prescription Drug Pricing. Ann Intern Med
7 Ton IT, Moon J., Sengui A, et al. Evidence-Based Cardiovascular Disease Medicines’ Availability in Low-Cost Generic Drug
Programs in the United States. Ann Intern Med 2023(Sep);176:1190-1199. Doi:10.7326/M23-0287.
Balancing Money and Mission
The expose in USA TODAY March 11th of the excess COVID 19 mortality in Trilogy nursing homes is yet another example of the need to address the imbalance between money and mission in healthcare.
Big medicine may be financially necessary, but it poses risks unless care is taken to become a real system, which requires putting the clinical enterprise at the center.
Conflicting Economic Models
Providers are being forced to take on financial risk for the cost of care as shown by recent news articles.
More on Money in Healthcare
Hospitals account for the largest fraction of the healthcare dollar, but are usually hegemonic if not monopolies in their communities. Can Trustees call them back to their mission of patient care?
Putting Patients At The Center Of Healthcare
Putting patients at the center is crucial for healthcare organizations, but how can it be done?
The Profit Motive
The American College of Physicians has published a new position paper on financial profit in health care.