Disruptive Innovation
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 medicine. 4 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 unaided. 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 2023(Sep);176:1259-1260. doi:10.7326/M23-1105. 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. |
Further Reading
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 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. |