You might have heard the term “disruptive innovation” in discussions about healthcare and technology. What is disruptive technology, and what does it mean for healthcare?
Disruptive innovation defined
A new product, service or business model is considered “disruptive” when it helps create a new market, eventually disrupting existing markets and displacing previous technologies.
Disruptive innovation has happened over and over, in industries like computing, photography, telecommunications, and retail. Studies of these industries reveal two important facts about disruptive innovation:
- The change resulting from disruptive innovation has always been positive, leaving us with better products and services than before.
- It is usually new entrants into the market that figure out a better way of doing things.
Of course, disruptive innovation, like any transformation, has winners and losers. Powerful institutional forces fight simpler alternatives because innovations challenge their livelihoods.
Disruptive technology in healthcare
Healthcare is ripe for disruptive innovation. As Christensen and colleagues wrote in a 2000 article in the Harvard Business Review, “Health care delivery is convoluted, expensive, and often deeply dissatisfying to consumers.”
Healthcare has changed radically in the past 20 years, but broadly speaking, Christensen’s statement still applies. Fortunately, the authors say that a whole host of disruptive innovations could end the crisis – but only if entrenched powers get out of the way and let market forces play out.
“If the natural process of disruption is allowed to proceed,” they write, “we’ll be able to build a new system that’s characterized by lower costs, higher quality, and greater convenience than could ever be achieved under the old system.”
A recent survey by NEJM Catalyst reaches a similar conclusion. The organization’s council of healthcare executives, clinical leaders and clinicians felt clear that disruptive innovation in healthcare will come from beyond traditional organizations. “Whether talking about disruptive innovation in hospitals, health care IT, or primary care,” they conclude, “respondents say focused start-ups will lead the way.”
“Whether talking about disruptive innovation in hospitals, health care IT, or primary care, respondents say focused start-ups will lead the way.”
A recent review of 400 digital technology projects and collaborations reaches a similar conclusion: startups offer higher promises of disruptive innovation. As the authors write, “established corporations rely more on incremental innovation that supports their current business models, while start-ups engage their flexibility to explore new market segments with notable transformations of established business models.”
While focused startups will bring the innovation, those in the field agree that hospitals and health systems are the sectors most in need of disruption. Next on the list are healthcare IT, primary care, and pharmaceuticals.
Where is disruption happening now?
Disruption is happening everywhere in healthcare – from AI to mHealth to 3D printing and robotics.
One example is athenahealth’s More Disruption Please (MDP) initiative, which launched in 2011 to break down barriers to healthcare innovation. MDP includes three programs: an accelerator to incubate promising health care entrepreneurs; marketplace partnerships for health care IT companies ready to scale; and a disruption network to grow connections.
Disruption isn’t always about new technology – it can also result from new business models. The athenahealth Marketplace is a good example of both. The website connects athenahealth’s client base of healthcare providers with emerging health IT companies through an app ecosystem model.
In addition to technological innovation, there are two general solutions that many think have disruptive potential in healthcare.
The first is decentralization. Disruption usually involves new market entrants creating products that bring in new consumers, but in health care everyone is already a consumer. In this case disruption will shift care from hospitals to clinics and office settings, and even into patients’ homes. This is where technologies like telemedicine are playing a critical role.
2. Transference of skills
The second is matching clinician’s skill level with the difficulty of the medical problem. This means transferring skills from highly trained, expensive personnel, to more affordable providers, including technology-based care. This will help address expensive care due to overshoot of patient needs by health care institutions.
Disruptive innovation is necessary, says Christensen, both for the healthcare industry and to improve patient care. But it’s only possible in the right environment. “Instead of working to preserve the existing system,” Christensen and colleagues conclude, “health care regulators need to ask how they can enable disruptive innovations to emerge.”